Payback is considered a flawed capital budgeting because it ________.

1; does not gives explicit consideration on the recovery of initial investment and possibility of a calamity

2; gives explicit consideration to risk exposure due to the use of the cost of capital as a discount rate

3; does not explicitly consider the time value of money

4; gives explicit consideration to the timing of cash flows and therefore the time value of money

Answer rating: 100% (QA)

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