Garrison Company has two investment opportunities.A cash flow schedule for the investments is provided below: $$\begin{array} { l c c }
\text { Year } & \text { Investment A } & \text { Investment B } \
0 & \mathbf { \$ } ( 5,000 ) & \mathbf { \$ } ( 6,000 ) \
1 & 2,000 & 3,000 \
2 & 2,000 & 2,000 \
3 & 2,000 & 2,000 \
4 & 2,000 & 1,000
\end{array}$$ Considering the unequal investments,which of the following techniques would be most appropriate for choosing between Investment A and Investment B?

Question

Garrison Company has two investment opportunities.A cash flow schedule for the investments is provided below: $$\begin{array} { l c c } 
\text { Year } & \text { Investment A } & \text { Investment B } \
0 & \mathbf { \$ } ( 5,000 ) & \mathbf { \$ } ( 6,000 ) \
1 & 2,000 & 3,000 \
2 & 2,000 & 2,000 \
3 & 2,000 & 2,000 \
4 & 2,000 & 1,000
\end{array}$$ Considering the unequal investments,which of the following techniques would be most appropriate for choosing between Investment A and Investment B?

Quizplus · Accepted Answer

The present value index (also known as the profitability index) is appropriate for comparing investments with different initial costs, as it considers the present value of cash inflows relative to the initial investment.

Garrison Company Has Two Investment Opportunities Considering the Unequal Investments,which of the Following Techniques Would Be