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They are simple to use, tells how long it takes to recoup an investment, useful for short time duration and on firms having cash flow problems. However, they are too simple, ignore qualitative aspects of decision, focus only on pay back period, does not look at the profitability of the project or the interest rates.

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9y ago
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9y ago

Advantages are that you will be able to get a good idea of what each technique entails. The disadvantages are that each person might have a bias for one and the information may not be accurate.

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Q: What are the comparison and differences of advantages and disadvantages of investment appraisal techniques?
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