A company is evaluating two projects. Project A has an initial investment of 200,000 USD and is expected to return 50,000 USD per year for 6 years. Project B has an initial investment of 150,000 USD and returns 45,000 USD per year for 4 years. Using the Payback Period method, which project should the BA recommend if the organization prioritizes the fastest capital recovery?https://go-math-science.com/computing/software-engineering/requirements-engineering/cbap-certification-practice-exams/cbap-practice-examp-2/a-company-is-evaluating-two-projects-project-a-has-an-initial-investment-of-200-000-and-is-expected-to-return-50-000-per-year-for-6-years-project-b-has-an-initial-investment-of-150-000-and-returns-45-000-per-year-for-4-years-using-the-payback-periodhttps://go-math-science.com/@@site-logo/logo-new.png
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A company is evaluating two projects. Project A has an initial investment of 200,000 USD and is expected to return 50,000 USD per year for 6 years. Project B has an initial investment of 150,000 USD and returns 45,000 USD per year for 4 years. Using the Payback Period method, which project should the BA recommend if the organization prioritizes the fastest capital recovery?
publish date: 1969/12/31 00:00:00 UTC
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Correct Answer
Project B
Explanation
Project B recovers its investment in 3.33 \(\frac{150,000}{45,000}\), while Project takes 4 years \(\frac{200,000}{50,000}\).
