Final answer:
The correct statement about the payback method is that it is used to calculate the time it takes to recover the initial investment of a project or asset. It does not account for the profitability of the project, present discounted value, or the internal rate of return.
Step-by-step explanation:
The payback method refers to the time it takes for a company or investor to recover their initial investment in a project or asset. Of the given options, statement 1) 'It is a method used to calculate the time it takes to recover the initial investment' correctly describes the payback method. The payback period is simply the amount of time it takes for the net cash inflows from an investment to equal the original outlay. This method is often used because it's easy to understand and calculate.
However, the payback method does not account for the time value of money, nor does it measure the overall profitability of a project. Therefore, it is not used for calculating the present discounted value (statement 3) or internal rate of return (statement 4) of a project, and it does not provide comprehensive insight into the profitability (statement 2) of a project when compared to methodologies like Net Present Value (NPV) or Internal Rate of Return (IRR).