hard20 pts · first answer countsfinancial-analysisbusiness-case

What payback ignores

Option X pays back in 1.5 years and then its benefits stop. Option Y pays back in 2.5 years and keeps delivering benefits for 6 years. What does choosing by payback period alone miss?

A.Nothing, because the faster payback is always the better investmentB.It counts benefits twice, overstating YC.It ignores the initial cost of both optionsD.It ignores benefits after the payback point and the time value of money, so Y could be far more valuable

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What payback ignores

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