Which investment(s) should you choose, considering all the above criteria, if the cost of capital is equal to 21% per year

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 13E: Buena Vision Clinic is considering an investment that requires an outlay of 600,000 and promises a...
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You must choose between two investments, G and W. The profitability index (PI), net present value (NPV) and internal rate of return (IRR) of the two investments are as follows:

 

Criteria Investment G Investment W

NPV –12 000 40 000

PI 0,985 1,053

IRR 20% 24%

 

Which investment(s) should you choose, considering all the above criteria, if the cost of capital is equal to 21% per year

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