Question: Requirement 2 . Select the method that corresponds to the appropriate explanation. This method indicates profitability by comparing the present value of the investment's net

Requirement

2 .

Select the method that corresponds to the appropriate explanation.

This method indicates profitability by comparing the present value of the investment's net cash inflows with the cost of the investment

(

already stated at its present value

) .

This method is superior because it incorporates the time value of money.

Profitability index

; This method helps to compare the NPV across alternative irvestments of varying sizes.

This method also indicates proftability and incorporates the time value of money. This method will show us the actual rate of return being earned on the investment by equating the present value of the net cash inflows to the investments cost. In other words, it is the interest rate which brings the investments NPV lo aere.

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