The disadvantage of static payback period method is that

The disadvantages of static payback period method are as follows:

Static payback period method is a commonly used investment decision analysis method, which evaluates the payback period of investment projects by calculating the accumulated net cash flow of investment projects in a certain period. Although this method has certain advantages, it also has some disadvantages, mainly including the following aspects:

Ignore the time value: the static payback period method does not consider the time value of funds, that is, the equal value of funds is different at different time points. Therefore, this method cannot accurately reflect the real benefits of the project.

One-sided pursuit of short-term benefits: the static payback period method only pays attention to the short-term benefits of investment, ignoring the long-term benefits and asset value of the project. This may lead to some long-term investment projects being underestimated and some short-term income projects being overestimated.

Ignore risks: Static payback period method does not consider the risks of investment projects, which makes this method have certain limitations in evaluating high-risk projects.

Lack of comparability: the static payback period of different projects may be quite different, which makes it difficult for different projects.

Affected by depreciation: the static payback period method is easily affected by depreciation, which makes this method may be biased in evaluating some fixed assets renewal projects.

To sum up, although the static payback period method is simple and easy to use, it has certain limitations in evaluating investment projects. In order to evaluate the investment value of the project more accurately, more factors need to be considered, such as time value, risk, income and so on.