What are the advantages and disadvantages of using this method in the capital budgeting process?

Coogly Company is trying to find its weighted average costs of

The payback period method is a simple and easy-to-use tool for capital budgeting. It can quickly find investments likely to yield returns in a very short time frame. The payback period method can be used to help prioritize investments, by allowing you to see how long it will take for an investment return (ROI).

Its inability to consider cash flows after the initial payment period is over, as well as future cash flow benefits that can be generated by longer-term investments are some of its disadvantages. The system does not account for opportunity costs or tax effects on returns.

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