Acct 102 – Chap 10 Annuity is a series of equal cash flows received or paid over equal time intervals at a constant rate of return. Capital Investments are purchases of operational assets involving a long-term commitment of funds that can be critically important to the company’s ultimate success. Costs are normally recovered through using the asset. Cost of Capital is the cost used to acquire financing. Incremental Revenue is the additional cash inflow from operating activities generated by using an additional capital asset. Internal Rate of Return is the rate at which the present value of an investment’s future cash inflows equals the cash outflows required to acquire the investment; the rate that produces a net present value of zero. Minimum Rate of Return is the minimum profitability required for a company to accept an investment opportunity. Other names are desired rate of return, required rate of return, hurdle rate, cutoff rate, and discount rate. Net Present Value
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