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Unformatted text preview: MATCHING – A Match the following terms to the statements shown below. Use capital letters for your answers. Each term can only be used once. A. Accounting rate of return G. Internal rate of return – uneven cash flows B. After-tax cash flows H. Net present value C. Annuity I. Payback period D. Capital budget J. Present value analysis E. Capital budgeting decision K. Soft benefits analysis F. Cost of capital L. Time value of money ______ 1. Represents the interest that can be earned. ______ 2. Is based on the average investment. ______ 3. Is the same as the required rate of return. ______ 4. An even annual cash flow. ______ 5. Converting future dollars into their equivalent current value. ______ 6. The length of time it takes to recover the initial investment. ______ 7. Cash inflows times one minus the tax rate. ______ 8. The same as investment decisions. ______ 9. The sum of the present values of all cash flows. ______ 10. The final list of approved projects. Chapter 9 Capital Budgeting Decisions MATCHING – B Match the following terms to the statements shown below. Use capital letters for your answers. Each term can only be used once. A. After tax cash outflow G. Internal rate of return – even cash flows B. Capital expenditure decisions H. Net present value C. Cash inflow I. Required rate of return D. Cash outflow J. Payback period E. Cost of capital K. Present value factors F. Depreciation tax shield L. Soft benefits ______ 1. Includes the cost of debt and equity financing. ______ 2. The difference between the present value of cash inflows and the present value of cash outflows. ______ 3. Cash outflow times one minus the tax rate. ______ 4. Depreciation times the tax rate. ______ 5. Doesn’t consider the time value of money. ______ 6. An example would be cost savings. ______ 7. A project is acceptable if the internal rate of return exceeds this number. ______ 8. Decisions concerning the acquisition of long-lived assets. ______ 9. Is determined by using a factor derived by dividing the initial investment by the annuity amount....
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- Spring '11
- Net Present Value, capital budgeting decisions, Annuity Capital