Describe which three of these investment criteria you recommend for use at your current (or a former) company for the selection of investment projects.
a. payback period
b. average accounting return
c. internal rate of return
d. profitability index
e. net present value
Discuss any shortcomings.© BrainMass Inc. brainmass.com March 21, 2019, 9:53 pm ad1c9bdddf
The following are the 3 methods recommended, the reason of recommendation and their shortcoming.
Net Present Value
Reason to recommend:
- States whether the project will increase the company's value or not
- Considers all cash flows
- Considers time value of money
- Considers the risk of future cash flows by discounting on company's cost of ...
Solution provides a calculation of the following: payback period, average accounting return, internal rate of return, profitability index and net present value.