Fill in the blank 2. Word Bank: Present value, Accounting rate of return, Initial cost of asset, Initial investment, Payback period

________________________= Initial investment /Expected annual net cash inflow

________________________= Average annual net cash inflow - annual depreciation expense / initial investment

Annual Depreciation Expense =________________________- Residual Value / Useful life of asset (in years)

________________________ = Amount of each cash inflow x annuity PV factor for the interest rate.

Profitability index = present value of net cash inflows +________________________