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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 longterm
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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 Spring '11
 Wang

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