Which of the following statements regarding the cash payback period is true?

Question

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The shorter the payback period, the quicker an investment recovers its initial outlay, reducing the risk of obsolescence since the asset starts generating net positive cash flows sooner. This does not necessarily relate to the estimated life of the asset (A) or imply that cash is recovered sooner with a longer payback period (B), which is actually the opposite of how payback period works.

Which of the Following Statements Regarding the Cash Payback Period