Presented below are terms preceded by letters (a)through (f)and followed by a list of definitions (1)through (6).Match the letter of the terms with the definitions.Use the space provided preceding each definition.
(a)Discounting
(b)Break-even time
(c)Return on average investment
(d)Net present value
(e)Uneven cash flows
(f)Accounting rate of return
__________ (1) Annual after-tax net income divided by annual average investment.
__________ (2) A rate used to evaluate the acceptability of an investment; equals the after-tax periodic income divided by the average investment in the asset.
__________ (3) 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.
__________ (4) Cash flows that are not all equal in amount.
__________ (5) The process of restating future cash flows in terms of their present value.
__________ (6) 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.
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