When comparing several investments with the same initial cost,the decision should be made on the basis of the ________.
A) highest total cash inflows
B) longest payback period
C) highest NPV
D) highest ARR

Question

Quizplus · Accepted Answer

The best choice would be the investment with the highest NPV because it takes into account the time value of money and provides a more accurate representation of the investment's profitability over its entire life. The payback period and ARR do not consider the time value of money and may not provide an accurate analysis of the investment's profitability. The investment with the highest total cash inflows may not be the most profitable if those cash inflows occur further in the future and are therefore discounted by the time value of money.

When Comparing Several Investments with the Same Initial Cost,the Decision