This quiz is based on the documents and problems on investment criteria. Most do not require any computation, but numbers can be created to fit the situation if necessary.

1. (3 points) Using an interest rate of 16%, the profitability indices for three investments A, B and C which all cost the same are 0.95, 1.15 and 1.00, respectively. Rank each investment in terms of their internal rates of return, from highest to lowest.

2. (1 point) Which investment should be chosen, one that costs $50,000 and has a profitability index of 1.25 or one that costs $150,000 and a profitability index of 1.20, if the objective is to have the higher net present value?

3. (2 points) What are the two most important reasons to not use payback as an investment criterion?

4. (2 points) An investment has two internal rates at return, one at 18% and another at 25%. When using an interest rate of 15%, the investments net present value is positive. Based on this, what are the ranges of interest rates that would result in positive net present values?