Payback Period for Intro Accounting?

A disadvantage of using the payback period to compare investment alternatives is that:

A. It ignores cash flows beyond the payback period.
B. It includes the time value of money.
C. It cannot be used when cash flows are not uniform.
D. It cannot be used to compare investments with different initial investments.

All of these seem wrong to me. I was under the impression that the big drawback for the payback period was its inability to deal with the time value of money

The answer is A. Let's say you have two investments that cost $50,000 each. The first has cash flows of $25,000, $25,000, and then zero from then on. The second has cash flows of $20,000 per year for 20 years. Obviously, the second is the better option, but under the Payback Period method, the first one would be chosen because it has a payback period of two years, while the second has a payback period of 2.5 years. The Payback Period method ignores the $20,000 per year for the next 17.5 years.

And you're right -- the other big drawback of the Payback Period method is that it ignores the time value of money.

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