Strength and weakness of Payback approach
 
Strength  of Payback approach is that it is simple and easy to calculate.
Payback method is popular for capital budgeting .This approach is easily understood concept. Those project will be chosen which gives fastest return. Managers could make quick evaluations of projects .
weakness of Payback approach is that it ignores the time value of money. Some time it’s possible that project could accepted by the payback method but it does not match company’s required rate if return. Payback method put emphasis on short-term profitability while company’s most of projects are long term