Deal of The Day! Hurry Up, Grab the Special Discount - Save 25% - Ends In 00:00:00 Coupon code: SAVE25
Welcome to Pass4Success

- Free Preparation Discussions
Mail Us support@pass4success.com
Location US
Mob_nav_barsMENU

CIPS L6M5 Exam - Topic 3 Question 7 Discussion

Actual exam question for CIPS's L6M5 exam
Question #: 7
Topic #: 3
[All L6M5 Questions]

What is the primary disadvantage of the Payback Analysis method?

Answer Options:

Show Suggested Answer Hide Answer
Suggested Answer: C

The Payback Method ignores the time value of money (TVM) (p.1.4).

Option A is incorrect---Payback is simple.

Option B is incorrect---it accounts for investment amounts.

Option D is incorrect---Payback can compare options, but lacks long-term financial accuracy. [P.1.4]


by Keneth at Mar 07, 2025, 07:30 PM

Limited Time Offer

25%

Off

Get Premium L6M5 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

0/2000 characters
Submit Cancel
Nobuko
6 months ago
Yeah, it really limits comparison between options.
upvoted 0 times
...
Truman
6 months ago
I think it’s too simplistic for serious analysis.
upvoted 0 times
...
Una
6 months ago
Wait, it ignores the amount invested too? That's surprising!
upvoted 0 times
...
Alberto
7 months ago
Totally agree, that's a major flaw!
upvoted 0 times
...
Laticia
7 months ago
It doesn't consider the time value of money.
upvoted 0 times
...
Kimberely
7 months ago
I thought it was about not comparing different options effectively, but now I'm leaning towards the time value of money being the bigger problem.
upvoted 0 times
...
Willie
7 months ago
I practiced a similar question, and I feel like the complexity of the method was mentioned, but I can't recall if that was the primary disadvantage.
upvoted 0 times
...
Glory
7 months ago
I'm not entirely sure, but I remember something about it ignoring cash flows after the payback period. Is that related to option C?
upvoted 0 times
...
Zoila
8 months ago
I think the main issue with Payback Analysis is that it doesn't account for the time value of money, right? That seems to be a common critique.
upvoted 0 times
...
Lashaun
8 months ago
Wait, I'm a little confused. Is the primary disadvantage that it ignores the amount invested, or that it doesn't compare different options? I need to re-read the question and options more closely to make sure I understand.
upvoted 0 times
...
Joye
8 months ago
Okay, let me see. The Payback Analysis method is focused on the time it takes to recoup the initial investment, but it doesn't consider other important factors like the time value of money or the overall profitability of the investment. I think that's the key weakness here.
upvoted 0 times
...
Mattie
8 months ago
Hmm, I'm a bit unsure about this one. The options seem to cover different potential drawbacks, but I'm not sure which one is considered the "primary" disadvantage. I'll have to think this through carefully.
upvoted 0 times
...
Irving
8 months ago
This seems like a straightforward question about the limitations of the Payback Analysis method. I'm pretty confident I can identify the primary disadvantage.
upvoted 0 times
...
Stephen
1 year ago
C) It does not consider the time value of money. This is the most important disadvantage as it completely skews the analysis.
upvoted 0 times
Alida
1 year ago
D) It does not compare different options
upvoted 0 times
...
Alline
1 year ago
C) It does not consider the time value of money
upvoted 0 times
...
Emilio
1 year ago
B) It ignores the amount of money invested
upvoted 0 times
...
Moon
1 year ago
A) It is complex
upvoted 0 times
...
...
Geoffrey
1 year ago
It's like trying to plan a road trip without a map - the Payback Analysis method is missing some crucial information.
upvoted 0 times
...
Dahlia
1 year ago
Ignoring the time value of money? That's like trying to buy a Ferrari with a handful of pocket change. It just doesn't add up!
upvoted 0 times
...
Truman
1 year ago
The Payback Analysis method is like trying to catch a slippery fish with your bare hands - it just doesn't consider the bigger picture!
upvoted 0 times
Melvin
1 year ago
C) It does not consider the time value of money
upvoted 0 times
...
Glenna
1 year ago
B) It ignores the amount of money invested
upvoted 0 times
...
Alayna
1 year ago
A) It is complex
upvoted 0 times
...
...
Lilli
1 year ago
I think that's a major drawback, especially when comparing projects with different cash flows over time.
upvoted 0 times
...
Rolland
1 year ago
That's true, the Payback Analysis method only focuses on how long it takes to recoup the initial investment.
upvoted 0 times
...
Johnathon
1 year ago
C) It does not consider the time value of money.
upvoted 0 times
...

Save Cancel