The Liberty Co

question 7

Multiple Choice

The Liberty Co.is considering two projects.Project A consists of building a wholesale book outlet on lot #169 of the Englewood Retail Center.Project B consists of building a sit-down restaurant on lot #169 of the Englewood Retail Center.When trying to decide whether to build the book outlet or the restaurant,management should rely most heavily on the analysis results from the _____ method of analysis.

• A)profitability index
• B)net present value
• C)payback
• D)internal rate of return
• E)accounting rate of return

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Definitions:

Inventory Control System

A system used by businesses to manage their inventory levels, ensuring they have the right products in the right quantity for sale, at the right time.

Inventory Period

The average time it takes for a company to convert its inventory into sales.

Cash Flows

The net amount of cash and cash-equivalents being transferred into and out of a business.