You Are Trying to Decide Between Three Mutually Exclusive Investment

question 16

Multiple Choice

You are trying to decide between three mutually exclusive investment opportunities.The most appropriate tool for identifying the correct decision is:

• A)NPV.
• B)profitability index.
• C)IRR.
• D)incremental IRR.

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Definitions:

Purchase Cost

The total expense incurred to acquire an asset, including the purchase price and associated costs.

360-Day Year

A financial convention or simplification to treat all months as 30 days in duration for the ease of interest calculations and financial analysis.

Commission

A fee or percentage of a sale paid to an employee or agent for facilitating or completing a sale.

Semiannually

Happening semiannually; every six months.