Matching
Match the items below.
Premises:
A capital budgeting technique that identifies the time period required to recover the cost of a capital investment from the annual cash inflow produced by the investment.
Capital budgeting techniques that consider both the estimated total cash inflows from the investment and the time value of money.
A method used in capital budgeting in which cash inflows are discounted to their present value and then compared to the capital outlay required by the capital investment.
A method of comparing alternative projects that takes into account both the size of the investment and its discounted cash flows.
A method used in capital budgeting that results in finding the interest yield of the potential investment.
The average rate of return that the firm must pay to obtain borrowed and equity funds.
The determination of the profitability of a capital expenditure by dividing expected annual net income by the average investment.
The process of making capital expenditure decisions in business.
Responses:
Profitability index
Internal rate of return method
Discounted cash flow techniques
Capital budgeting
Annual rate of return method
Cash payback technique
Cost of capital
Net present value method
Correct Answer:
Premises:
Responses:
A capital budgeting technique that identifies the time period required to recover the cost of a capital investment from the annual cash inflow produced by the investment.
Capital budgeting techniques that consider both the estimated total cash inflows from the investment and the time value of money.
A method used in capital budgeting in which cash inflows are discounted to their present value and then compared to the capital outlay required by the capital investment.
A method of comparing alternative projects that takes into account both the size of the investment and its discounted cash flows.
A method used in capital budgeting that results in finding the interest yield of the potential investment.
The average rate of return that the firm must pay to obtain borrowed and equity funds.
The determination of the profitability of a capital expenditure by dividing expected annual net income by the average investment.
The process of making capital expenditure decisions in business.
Premises:
A capital budgeting technique that identifies the time period required to recover the cost of a capital investment from the annual cash inflow produced by the investment.
Capital budgeting techniques that consider both the estimated total cash inflows from the investment and the time value of money.
A method used in capital budgeting in which cash inflows are discounted to their present value and then compared to the capital outlay required by the capital investment.
A method of comparing alternative projects that takes into account both the size of the investment and its discounted cash flows.
A method used in capital budgeting that results in finding the interest yield of the potential investment.
The average rate of return that the firm must pay to obtain borrowed and equity funds.
The determination of the profitability of a capital expenditure by dividing expected annual net income by the average investment.
The process of making capital expenditure decisions in business.
Responses:
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