Answer (B) is correct . The payback method measures the number of years required to complete the return of the original investment. This measure is computed by dividing the net investment by the average expected cash inflows to be generated, resulting in the number of years required to recover the original investment. The payback method gives no consideration to the time value of money, and there is no consideration of returns after the payback period.
Answer (A) is incorrect because The discounted cash flow method computes a rate of return.
Answer (C) is incorrect because The net present value method is based on discounted cash flows; the length of time to recover an investment is not the result.
Answer (D) is incorrect because The net present value method is based on discounted cash flows; the length of time to recover an investment is not the result.
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