When Several Alternative Investment Proposals of the Same Amount Are

question 94

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 index
• B) consumer price index
• C) present value index
• D) price-level index

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Definitions:

Warranty Repairs

Services offered for free by a manufacturer or seller to correct defects or malfunctions within a certain period after purchase.

Warranty Expense

Costs that a company anticipates or incurs when repairing or replacing products under warranty to meet its customers' expectations or contractual obligations.

Installment Note

A debt instrument that requires a series of periodic payments, typically consisting of both principal and interest.

Annual Payments

Periodic payments made once every year.