When Comparing Several Investments with the Same Initial Cost,the Decision

question 8

Multiple Choice

When comparing several investments with the same initial cost,the decision should be made on the basis of the ________.

• A) highest total cash inflows
• B) longest payback period
• C) highest NPV
• D) highest ARR

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Definitions:

Semi-Annual Deposits

Deposits made twice a year into a financial account or investment vehicle.

Compounded Quarterly

Refers to the process of calculating interest on both the initial principal and the accumulated interest from previous periods on a quarterly basis.

Compounded Semi-Annually

Interest that is computed and added to the principal twice a year, allowing the investment to grow more rapidly.

Future Value

The value of a current asset at a specified date in the future based on an assumed rate of growth.