When several alternative investment proposals of the same amount are being considered, the one with the largest net present value is the most desirable. If the alternative proposals involve different amounts of investment, it is useful to prepare a relative ranking of the proposals by using a(n) _____ index.

Question

Quizplus · Accepted Answer

The correct term is "present value index," which is used to compare the relative profitability of investment proposals when they involve different amounts of investment. This index helps in ranking the proposals by considering the present value of future cash flows relative to the initial investment.

When Several Alternative Investment Proposals of the Same Amount Are