Which of the following is not a contributing factor in making the choice of a di

Question

Which of the following is not a contributing factor in making the choice of a discount rate a critical issue in selecting among alternative investment opportunities? Which of the following techniques is generally more useful when comparing investment projects that require different levels of initial cash outflow? A property's investment value to a particular investor: The purchase price that will yield an investor the lowest acceptable rate of return: The profitability index is most useful when choosing among projects that:

Explanation / Answer

39. Discount rate to be choosen in evaluating aproject should be such that atleast the present value of cashoutflows becomes equals to the present value of cash inflows. Using a higher discount rate will make an investment look unjustifiable. Therefore statement that using a higher discount rate make an investment appear unjusfiablly attractive is not correct.

Thus answer will be (a).

40. Net present value technique is most useful when it comes to compare investments involving different levels of initial cash outflow.

Thus answer will be b. NPV

41. A properties investment value to a particular investor is computed using a risk free return.

Thus answer will be d.

42. NPV is a lowest acceptable return to the investor, thus answer will be b.

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