The payback method is often more useful than the net present value method for evaluating systems projects because the effective lives of information system tend to be short and shorter payback projects are often desirable.

Question

Quizplus · Accepted Answer

The payback method focuses on how quickly a project can recoup its initial investment, which can be more useful for shorter-lived information systems projects. In contrast, the net present value method considers the time value of money and can more accurately assess the long-term profitability of a project, but may not be as useful for shorter-term projects. Therefore, in the context of evaluating systems projects, the payback method may be more appropriate.

The Payback Method Is Often More Useful Than the Net