Based on the financial analysis that’s been completed by the analytics team, the business analysis professional reminds the team that the most financially feasible option is the one with the:
A.
Highest ROI, lowest present value, highest NPV and lowest payback period
B.
Highest ROI, lowest present value, lowest NPV and highest payback period
C.
Highest ROI, highest present value, highest NPV, and lowest payback period
D.
Highest ROI, highest present value, lowest NPV and highest payback period
A is incorrect; it C
When evaluating financial feasibility, the following metrics are commonly used in decision-making:
*ROI (Return on Investment): A higher ROI indicates better profitability relative to the investment.
*Present Value (PV): A higher present value reflects a greater value of future cash flows in today's terms.
*NPV (Net Present Value): A higher NPV indicates a project will generate more value than its cost, making it financially attractive.
*Payback Period: A shorter payback period is preferred because it reduces the risk of investment and allows quicker recovery of the initial investment.
In this case- The most financially feasible option will maximize returns and value (higher ROI, PV, and NPV) while minimizing risk (lower payback period). Option C aligns with these criteria, making it the correct choice.
See BABOK 10.20 Financial analysis.
I'm going with A, because:
Highest ROI: This is good as it shows a high return relative to the investment. Maximize return.
Lowest Present Value: This is good as it means less current expenditure. Minimizes current cost.
Highest NPV: This is good as it indicates greater value added from the investment. Maximizes net value.
Lowest Payback Period: This is good as it shows the investment will be recovered quickly. Minimizes time to recover investment.
upvoted 2 times
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