Relevant range Relevant costs (differential costs) Sunk costs Opportunity cost Annuity B 10) Range of activity over which the company expects to operate 3 (often 40-80% of capacity). 11) Costs which differ between two alternatives. 4 12) Costs incurred in the past that can't be changed or avoided. 5 13) Potential benefit lost by pursuing one alternative over another. 6 14) Series of equal periodic payments 7 15) Amount we must invest today to provide for a series of future 8 payments 16) Amount of money that a series of payments will grow to at some 9 point in the future. 17) Present value of cash inflows - initial capital outlay 10 18) Percentage yield on a potential investment 11 19) Amount that a dollar will grow to at some point in the future 12 20) The amount we must invest today to accumulate a known future | 16 | 7 8 #9 Cash Flow 10-20 21-24 #25 Extra Credit Ready Present value of an annuity Future value Net present value Internal Rate of Return Present value FV Table PVT 19) Amount that a dollar will grow to at some point in the future Present value 20) The amount we must invest today to accumulate a known future Future value of an annuity amount