You must choose between two investments, X and Y . The profitability index (PI), net present value (NPV) and internal rate of return (IRR) of the two investments are as follows: Criteria Investment X Investment Y NPV R44 000 −R22 000 PI 1,945 0,071 IRR 16,00% 8,04% Which investment(s) should you choose, taking all the above criteria into consideration, if the cost of capital is equal to 12% per year? [1] X [2] Y [3] Both X and Y [4] Neither X nor Y [5] Too little information to make a decision 25 DSC1630/001

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You must choose between two investments, X and Y . The profitability index (PI), net present value (NPV)
and internal rate of return (IRR) of the two investments are as follows:
Criteria Investment X Investment Y
NPV R44 000 −R22 000
PI 1,945 0,071
IRR 16,00% 8,04%
Which investment(s) should you choose, taking all the above criteria into consideration, if the cost of capital
is equal to 12% per year?
[1] X
[2] Y
[3] Both X and Y
[4] Neither X nor Y
[5] Too little information to make a decision
25
DSC1630/001

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