When comparing several investments with the same initial outlay,the decision should be made on the basis of the ________.

Question

Quizplus · Accepted Answer

The highest NPV (Net Present Value) should be the deciding factor as it considers the time value of money and provides the present value of future cash flows. The higher the NPV, the more profitable the investment is. ARR (Accounting Rate of Return) only considers accounting profit and does not account for the time value of money. Payback period does not consider all the cash flows and only measures the time taken to recoup the initial investment. Total cash inflows can be misleading as it does not consider the time value of money or the size and timing of the cash flows.

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