Matching
Match the following definitions with the appropriate terms
Premises:
Annual after-tax net income divided by annual average investment.
A rate used to evaluate the acceptability of an investment; equals the after-tax periodic income divided by the average investment in the asset.
An estimate of an asset's value to the company; calculated by discounting the future cash flows from the investment at a satisfactory rate and then subtracting the initial cost of the investment.
Cash flows that are not all equal in amount.
The process of restating future cash flows in terms of their present value.
A measure of the amount of time needed for the present value of the net cash flows to equal the initial cost of an investment.
Responses:
Discounting
Break-even time
Return on average investment
Net present value
Uneven cash flows
Accounting rate of return
Correct Answer:
Premises:
Responses:
Annual after-tax net income divided by annual average investment.
A rate used to evaluate the acceptability of an investment; equals the after-tax periodic income divided by the average investment in the asset.
An estimate of an asset's value to the company; calculated by discounting the future cash flows from the investment at a satisfactory rate and then subtracting the initial cost of the investment.
Cash flows that are not all equal in amount.
The process of restating future cash flows in terms of their present value.
A measure of the amount of time needed for the present value of the net cash flows to equal the initial cost of an investment.
Premises:
Annual after-tax net income divided by annual average investment.
A rate used to evaluate the acceptability of an investment; equals the after-tax periodic income divided by the average investment in the asset.
An estimate of an asset's value to the company; calculated by discounting the future cash flows from the investment at a satisfactory rate and then subtracting the initial cost of the investment.
Cash flows that are not all equal in amount.
The process of restating future cash flows in terms of their present value.
A measure of the amount of time needed for the present value of the net cash flows to equal the initial cost of an investment.
Responses:
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