Question
Garrison Company has two investment opportunities. A cash flow schedule for the investments is provided below: Year Investment A Investment B 0 $ (4,400 )
Garrison Company has two investment opportunities. A cash flow schedule for the investments is provided below:
| Year | Investment A | Investment B | |||||||||
| 0 | $ | (4,400 | ) | $ | (5,100 | ) | |||||
| 1 | 1,760 | 2,640 | |||||||||
| 2 | 1,760 | 1,760 | |||||||||
| 3 | 1,760 | 1,760 | |||||||||
| 4 | 1,760 | 880 | |||||||||
Considering the unequal investments, which of the following techniques would be most appropriate for choosing between Investment A and Investment B?
Multiple Choice
-
Payback method
-
Present value index
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Net present value method
-
None of these answers are correct.
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South Western Federal Taxation 2014 Comprehensive Volume
Authors: William H. Hoffman, David M. Maloney, William A. Raabe, James C. Young
37th Edition
1285180925, 978-1285180922
