Determining the Worst Payoff for Each Alternative and Choosing the Alternative

question 12

Multiple Choice

Determining the worst payoff for each alternative and choosing the alternative with the "best of the worst" is the approach called:

• A)maximax
• B)maximin
• C)Laplace
• D)minimax regret
• E)expected monetary value

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Definitions:

Profitability Index

An economic instrument that evaluates the comparative profitability of an investment by dividing the current value of forthcoming cash flows by the initial cost of investment.

Cash Inflows

The total amount of money being transferred into a business, often from operations, financing, or investing activities; critical for assessing a company's liquidity and financial health.

Investment Projects

Initiatives or activities undertaken by an entity to invest capital with the aim of generating revenue or appreciating in value.

Internal Rate of Return

The discount rate at which the net present value of all cash flows from a particular project equals zero.