10. You are trying to decide between three mutually exclusive investment opportunities. The most appropriate tool...
10. You are trying to decide between three mutually exclusive investment opportunities. The most appropriate tool for identifying the correct decision is: A. IRR. B. incremental IRR. C. profitability index. D. NPV.
Homework Answers
Net Present Value is the most appropriate out of them.
There are projects where you will find multiple IRR. For example,
if you project has initial investment, then cash inflow for two
years, then again cash outflow and then cash inflows for next year
onwards, you will find two IRR. Same problem will be there in
Incremental IRR also. Which of the rates will you consider accurate
and appropriate for your project? Profitability Index will fail in
times of capital rationing. So, it leaves only NPV as the most
appropriate choice.
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10. You are trying to decide between three mutually exclusive
investment opportunities. The most appropriate tool...
Q11 ID: 9.4-3 11. You are trying to decide between three mutually exclusive investment opportunities. The...
Q11
ID: 9.4-3 11. You are trying to decide between three mutually exclusive investment opportunities. The most appropriate tool for identifying the correct decision is_ 0 A. incremental internal rate of return (IRR) O B. internal rate of return (RR) O C. profitability index 0 D. net present value (NPV) ID: 8.4-14
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Q11
ID: 9.4-3 11. You are trying to decide between three mutually exclusive investment opportunities. The most appropriate tool for identifying the correct decision is_ 0 A. incremental internal rate of return (IRR) O B. internal rate of return (RR) O C. profitability index 0 D. net present value (NPV) ID: 8.4-14
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