Question 1

Match each definition that follows with the term a-f it defines.
-The length of time it will take to recover through cash inflows the dollars of a capital outlay

Accepted Answer

The term that defines the length of time it will take to recover through cash inflows the dollars of a capital outlay is the payback period.

Question 2

Match each definition that follows with the term a-e it defines.
-Average income as a percentage of average investment

Accepted Answer

The definition matches with the term "Average rate of return", which calculates the average income earned as a percentage of the average investment.

Question 3

Match each definition that follows with the term a-f it defines.
-A stream of equal cash flow amounts

Accepted Answer

An annuity refers to a stream of equal cash flow amounts, usually occurring at fixed intervals over a specific length of time. The other terms listed relate to methods of evaluating capital investment decisions.

Question 4

Match each definition that follows with the term a-f it defines.
-Uses present value concepts to compute the rate of return on an investment from a capital investment proposal based on its' expected net cash flows

Accepted Answer

The definition describes the Internal Rate of Return (IRR) method, which uses present value concepts to compute the rate of return on an investment. The other choices are not applicable to this definition. capital rationing refers to the constraint on capital available for investment. An annuity is a series of equal payments over a period of time. Capital investment analysis includes different methods of evaluating investment opportunities. The payback period is the time it takes for an investment to recoup its initial cost. The accounting rate of return measures the profitability of an investment based on its accounting earnings.

Question 5

Match each definition that follows with the term a-e it defines.
-Often referred to as the discounted cash flow method

Accepted Answer

The net present value method is often referred to as the discounted cash flow method. The other choices, capital investment analysis, time value of money concept, average rate of return, and cash payback period, are all related to investment analysis but do not specifically refer to the discounted cash flow method.

Question 6

Match each definition that follows with the term a-f it defines.
-The process by which management allocates funds among various capital investment proposals

Accepted Answer

Capital rationing is the process by which management allocates funds among various capital investment proposals, deciding which projects to invest in based on budget constraints and strategic priorities.

Question 7

Match each definition that follows with the term a-f it defines.
-A formal means of analyzing long-range investment decisions

Accepted Answer

Capital investment analysis is the formal means of analyzing long-range investment decisions. Annuity is a series of equal cash flows at fixed intervals. Capital rationing is a situation where a company has limited funds to invest in capital projects. Internal rate of return method is a technique used to calculate the rate of return on an investment. Payback period is the time required for an investment to repay its initial cost. Accounting rate of return is a method used to measure the profitability of an investment based on the expected annual income it will generate.

Question 8

Match each definition that follows with the term a-e it defines.
-Also referred to as capital budgeting

Accepted Answer

Capital investment analysis, also known as capital budgeting, involves evaluating a firm's potential investments or expenditures to determine whether they are worth pursuing. This process helps businesses decide on the best projects to invest in, aiming to maximize profitability and growth.

Question 9

Match each definition that follows with the term a-e it defines.
-Can be determined by initial cost divided by annual net cash inflow of an investment

Accepted Answer

The definition given matches with the term "Cash payback period".

Question 10

Match each definition that follows with the term a-f it defines.
-A measure of the average income as a percent of the average investment

Accepted Answer

The definition matches with Accounting rate of return, which is a measure of the profitability of an investment, calculated as the average income divided by the average investment.

Quiz 10: Capital Investment Analysis

Match each definition that follows with the term a-f it defines. -The length of time it will take to recover through cash inflows the dollars of a capital outlay

Match each definition that follows with the term a-e it defines. -Average income as a percentage of average investment

Match each definition that follows with the term a-f it defines. -A stream of equal cash flow amounts

Match each definition that follows with the term a-f it defines. -Uses present value concepts to compute the rate of return on an investment from a capital investment proposal based on its' expected net cash flows

Match each definition that follows with the term a-e it defines. -Often referred to as the discounted cash flow method

Match each definition that follows with the term a-f it defines. -The process by which management allocates funds among various capital investment proposals

Match each definition that follows with the term a-f it defines. -A formal means of analyzing long-range investment decisions

Match each definition that follows with the term a-e it defines. -Also referred to as capital budgeting

Match each definition that follows with the term a-e it defines. -Can be determined by initial cost divided by annual net cash inflow of an investment

Match each definition that follows with the term a-f it defines. -A measure of the average income as a percent of the average investment