In the absence of capital rationing, the method is normally superior to the method when choosing among mutually exclusive investments.
A)net present value, internal rate of return
B)internal rate of return, profitability index
C)net present value, profitability index
D)a and c

Question

Quizplus · Accepted Answer

In the absence of capital rationing, the net present value (NPV) method and the profitability index (PI) method are both superior to the internal rate of return (IRR) method when choosing among mutually exclusive investments. This is because the NPV and PI methods take into account the time value of money, while the IRR method does not.

In the Absence of Capital Rationing, the Method Is Normally