|Evaluating Business Investments #1||Open|
1) The _______________ rate of return does NOT use cash flows.
2) The _____ present value is the difference between the discounted cash going out and the discounted cash coming in.
3) One step in determining the net present value of a project is to discount the future cash flows by the ___________ rate of return. Also referred to as the targeted, desired, minimum, or hurdle rate of return.
4) When deciding on replacing an old piece of equipment, the cost of the old equipment should be viewed as a _________ cost, since it is not relevant to the decision.
5) A corporation's cost of capital is a _____________-average of its cost of common stock, cost of preferred stock, and the cost of its long-term debt.
6) Payback determines the _________ it takes to recover an investment without discounting any amounts.
7) The depreciation amount used for book or financial statement purposes is often different from the depreciation amount used for the _______ return.
8) The ______ value of an asset is its cost minus its accumulated depreciation.
9) The _____________ rate of return uses discounted cash flows.
10) Since most companies cannot accomplish all of the capital expenditures that have been identified as needed, companies rank the projects according to priority, profitability, etc. as part of a process known as capital _______________.
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