Seth Morrison is considering alternative proposals that involve different amounts of investments. To compare different size investment proposals, it may be helpful for Seth to prepare a relative ranking of the proposals by using a(n):

Question

Quizplus · Accepted Answer

To compare different size investment alternatives, management can compute a present value index by dividing the present value of the cash inflows by the present value of the cash outflows. The higher the ratio, the higher the rate of return per dollar invested in the proposed project.

Seth Morrison Is Considering Alternative Proposals That Involve Different Amounts