Question

Select the correct term for each of the following descriptions Hint: These are not necessarily complete definitions, but there is only one possible description for each term Descriptions Terms This value is calculated by summing a project's expected annual cash inflows until their cumulative value equals the project's initial cost. Capital budgeting This analysis involves a comparison of the expected and actual results for a given capital project and the development of an explanation for any disparity between them. Independent project Inbemal rate of return The process of planning and evaluating expenditures on assets whose cash flows are expected to extend beyond one year Modified internal rate of rolum Net present value The discount rate at which the present value of a project's cash outflows is equal to the present value of the sum of its future cash inflows, assuming that cash flows are reinvested at the firm's required rate of retum NPV profile Payback period Post-audit analysis This capital budgeting technique calculates the netdollar value of a capital project and its effect on the value of the firm Replacement decision Required rate of return A graph that uses the relationship between a project's not present value (NPV) calculated at a range of hurdle rates

Answer 1

1 Payback period 2 Post-audit analysis 3 Capital budgeting 4 Modified internal rate of return 5 Net present value 6NPV Profile 7 Internal rate of return 8 Replacement decision 9 Required rate of return 10 Independent project