Crespi Inc. is trying to decide between two investment alternatives, A and B. Data for...
90.2K
Verified Solution
Link Copied!
Question
Accounting
Crespi Inc. is trying to decide between two investment alternatives, A and B. Data for A and B are as follows:
| Investment A | Investment B | |
| Cost of investment | 120,000 | 40,000 |
| Present value of net cash inflows | 145,436 | 48,751 |
| Net present value | 25,436 | 8,751 |
Crespi can only invest in one of the two alternatives. Which of the following recommendations should Crespi follow?
A.Invest in A because it has the higher NPV.
B.Invest in A because it has a profitability index of 1.21, whereas B has a profitability index of 1.22.
C.Do not invest in either A or B because A has a profitability index of .21, and B has a profitability index of .22.
D.Invest in either A or B because each has a positive NPV.
E.Invest in B because it has a profitability index of 1.22, whereas A has a profitability index of 1.21.
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.