Question
Company must choose which investments to pursue due to limited funds Computes the number of dollars returned for every dollar invested Process of deciding whether
Company must choose which investments to pursue due to limited funds | |
Computes the number of dollars returned for every dollar invested | |
Process of deciding whether to invest in new equipment, new vehicles or new technology | |
The length of time it takes to recover the cost of the capital outlay through net cash inflows | |
The difference between the present value of the investments net cash inflows and the cost of the initial investment | |
Minimum rate that an investment must earn in order to be acceptable | |
Interest rate that makes the NPV of the investment equal to zero | |
Means decision rule is to make investment | |
Includes the initial investment in the equipment | |
Interest Is earned only on the principal amount | |
Future cash revenue generated, any future savings in operating costs and any future residual value | |
Measures the average annual rate of return over the assets life | |
Causes cash received sooner in time to be worth more than cash flows received later in time because money earns income over time | |
Interest is earned on principle plus interest earned to date | |
Series of equal installments made at equal time intervals |
1. | Capital budgeting |
2. | Cash inflows |
3. | Cash outflows |
4. | Capital rationing |
5. | Payback period |
6. | Accounting rate of return |
7. | Time value of money |
8. | Annuity |
9. | Compound interest |
10. | Net present value |
11. | Discount rate |
12. | Investment with a positive net present value |
13. | Internal rate of return |
14. | Profitability index |
15. | Simple interest |
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