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Simple payback ignores

  • A.the tariff at which the energy is charged
  • B.everything that happens after the payback point
  • C.the size of the initial investment
  • D.the magnitude of the annual saving

Answer: B

A measure paying back in three years and then failing is ranked equally with one paying back in three years and running for twenty, which is the criterion's fundamental defect. It also ignores the time value of money entirely.

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