When Several Alternative Investment Proposals of the Same Amount Are

question 91

Multiple Choice

When several alternative investment proposals of the same amount are being considered, the one with the largest net present value is the most desirable.If the alternative proposals involve different amounts of investment, it is useful to prepare a relative ranking of the proposals by using a(n) :

• A) average rate of return.
• B) cash payback period.
• C) present value index.
• D) price-level index.

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Definitions:

Deductive Reasoning

A logical process where conclusions are drawn from a set of premises, starting with a general statement followed by specific instances.

Probabilistic Conclusions

Conclusions or inferences that are based on probabilities rather than certainties, often used in the context of decision-making under uncertainty.

Availability Heuristic

A mental shortcut that relies on immediate examples that come to a person's mind when evaluating a specific topic, concept, method, or decision.

Remembered

Pertains to information or experiences that have been stored in memory and can be retrieved.