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Match Each Definition That Follows with the Term (A-E) It

Question 162

Matching

Match each definition that follows with the term (a-e) it defines.

Premises:

Responses:

Average income as a percentage of average investment

Average rate of return

Often referred to as the discounted cash flow method

Cash payback period

The length of time it will take to recover through cash inflows the dollars of a capital outlay

Time value of money concept

A formal means of analyzing long-range investment decisions

Payback period

The process by which management allocates funds among various capital investment proposals

Internal rate of return method

Can be determined by initial cost divided by annual net cash inflow of an investment

Capital investment analysis

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

Annuity

Also referred to as capital budgeting

Net present value method

A measure of the average income as a percent of the average investment

Capital rationing

A stream of equal cash flow amounts

Accounting rate of return

Recognizes that a dollar today is worth more than a dollar tomorrow

Premises:

Average income as a percentage of average investment

Often referred to as the discounted cash flow method

The length of time it will take to recover through cash inflows the dollars of a capital outlay

A formal means of analyzing long-range investment decisions

The process by which management allocates funds among various capital investment proposals

Can be determined by initial cost divided by annual net cash inflow of an investment

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

Also referred to as capital budgeting

A measure of the average income as a percent of the average investment

A stream of equal cash flow amounts

Recognizes that a dollar today is worth more than a dollar tomorrow

Responses:

Average rate of return

Cash payback period

Time value of money concept

Payback period

Internal rate of return method

Capital investment analysis

Annuity

Net present value method

Capital rationing

Accounting rate of return

Correct Answer:

Premises:

Responses:

Average income as a percentage of average investment

Often referred to as the discounted cash flow method

The length of time it will take to recover through cash inflows the dollars of a capital outlay

A formal means of analyzing long-range investment decisions

The process by which management allocates funds among various capital investment proposals

Can be determined by initial cost divided by annual net cash inflow of an investment

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

Also referred to as capital budgeting

A measure of the average income as a percent of the average investment

A stream of equal cash flow amounts

Recognizes that a dollar today is worth more than a dollar tomorrow