A(n)_____ analysis is a simplification methodology used to reduce the magnitude and complexity of the information that must be considered in making an appropriate decision when choosing from among investment alternatives.
A) SWOT
B) time-series
C) auditor's report
D) net present value

Question

Quizplus · Accepted Answer

Net present value analysis involves calculating the present value of expected cash inflows minus the present value of expected cash outflows to determine the profitability of an investment. This methodology helps decision-makers compare investment alternatives and select the most economically viable option. It simplifies the decision-making process by focusing on the most critical factor, profitability. On the other hand, SWOT analysis provides an overview of the internal and external factors that impact an investment decision. A time-series analysis focuses on studying a specific variable's behavior over time, while an auditor's report provides an opinion on the financial statements' accuracy and reliability. While these analyses are useful, they do not provide a direct comparison of investment alternatives' profitability.

A(n)_____ Analysis Is a Simplification Methodology Used to Reduce the Magnitude