If Sarah wanted to recover her initial investment as quickly as possible, which option would you advise?

If Sarah wanted to recover her initial investment as quickly as possible, which option would you advise?

• A. Business A
• B. Business B
• C. Business C
• D. Business D

Answer: (D)

The main idea here is payback period—the time it takes to recover the initial investment. When the goal is to recoup money quickly, you look at how fast each option’s cash inflows add up to equal the amount you initially invested. The best choice is the one that reaches that break-even point first, because it minimizes the time your capital is at risk and reduces opportunity cost. In practical terms, you’d compare the timing of cash inflows for each option and pick the one whose cumulative cash flows cover the initial outlay the fastest. Other options may offer bigger profits later, but they delay recovery, which is why they’re less suitable for the goal of quick repayment.

The main idea here is payback period—the time it takes to recover the initial investment. When the goal is to recoup money quickly, you look at how fast each option’s cash inflows add up to equal the amount you initially invested. The best choice is the one that reaches that break-even point first, because it minimizes the time your capital is at risk and reduces opportunity cost. In practical terms, you’d compare the timing of cash inflows for each option and pick the one whose cumulative cash flows cover the initial outlay the fastest. Other options may offer bigger profits later, but they delay recovery, which is why they’re less suitable for the goal of quick repayment.