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

Question

Quizplus · Accepted Answer

The best choice when comparing investments with the same initial outlay is to choose the one with the highest NPV. NPV takes into account the time value of money and provides a more accurate picture of the actual profitability of an investment. Choosing the investment with the highest total cash inflows or longest payback period may not necessarily result in the highest profitability. ARR can also be misleading as it does not take into account the time value of money.

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