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18 October, 05:05

Which of the following decision rules might best be used as a supplement to net present value (NPV) by a firm that favors liquidity? A) payback periodB) profitability indexC) MIRRD) equivalent annual annuity

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  1. 18 October, 05:08
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    The correct answer is A

    Explanation:

    NPV stands for Net Present Value, which is the difference among the present value of the cash outflows and present value of the cash inflows which is computed for a particular period of year or time.

    Whereas Payback period is the one which is used for determining the length or the time period of the project required to recover the initial cash outlay.

    So, the decision rules could be taken by using the payback period instead of or supplement of NPV by the firm.
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