A Company Has a Decision to Make Between Two Investment

question 131

Essay

A company has a decision to make between two investment alternatives. The company requires a 10% return on investment. Predicted data is provided below:
The present value of an annuity for 6 years at 10% is 4.3553. This company uses straight-line depreciation.
Required:
(a) Calculate the net present value for each investment.
(b) Calculate the profitability index for each investment.
(c) Which investment should this company select? Explain.

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Definitions:

Double-blind Study

A research design in which both the participants and the researchers are unaware of who is in the control group and who is in the experimental group, eliminating bias.

Experimental Group

A group of subjects in an experiment who are exposed to the variable under investigation, allowing researchers to assess the effect of this variable.

Control Group

In experimental research, a group of subjects that does not receive the experimental treatment, serving as a comparison to assess the effect of the treatment.

Goals Of Psychology

To describe, explain, predict, and change behavior and mental processes through the application of scientific methods.