Which one of the following methods of analysis is most appropriate to use when two investments are mutually exclusive?

A. Profitability index
B. Average accounting return
C. Internal rate of return
D. Modified internal rate of return
E. Net present value

Question

21-07-2024
Business

Answered

Which one of the following methods of analysis is most appropriate to use when two investments are mutually exclusive?

A. Profitability index
B. Average accounting return
C. Internal rate of return
D. Modified internal rate of return
E. Net present value

Answer :

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GinnyAnswer GinnyAnswer · Answer 1 · 2024-07-21T16:59:31-04:00

Final answer:

Net Present Value (NPV) is the best method for analyzing mutually exclusive investments, as it assesses profitability by comparing cash inflows and outflows.

Explanation:

Net Present Value (NPV) is the most appropriate method of analysis to use when two investments are mutually exclusive. NPV calculates the present value of cash inflows and outflows to determine if the project will be profitable. A positive NPV indicates that the project's earnings exceed the costs, making it economically desirable.

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Which one of the following methods of analysis is most appropriate to use when two investments are mutually exclusive?A. Profitability indexB. Average accounting returnC. Internal rate of returnD. Modified internal rate of returnE. Net present value

Answer :

Final answer:

Explanation:

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Other Questions

Which one of the following methods of analysis is most appropriate to use when two investments are mutually exclusive?

A. Profitability index
B. Average accounting return
C. Internal rate of return
D. Modified internal rate of return
E. Net present value