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Match each definition that follows with the term (a–f) it defines. A measure of the average...

Match each definition that follows with the term (a–f) it defines.

  1. A measure of the average income as a percent of the average investment
  2. The process by which management allocates funds among various capital investment proposals
  3. A stream of equal cash flow amounts
  4. A formal means of analyzing long-range investment decisions
  5. Uses present value concepts to compute the rate of return on an investment from a capital investment proposal based on its' expected net cash flows
  6. The length of time it will take to recover through cash inflows the dollars of a capital outlay

           

a. Capital rationing

b. Annuity

c. Capital investment analysis

d. Internal rate of return method

e. Payback period

f. Accounting rate of

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Answer #1
a. Capital rationing The process by which management allocates funds among various capital investment proposals
b. Annuity A stream of equal cash flow amounts
c. Capital investment analysis A formal means of analyzing long-range investment decisions
d. Internal rate of return method Uses present value concepts to compute the rate of return on an investment from a capital investment proposal based on its' expected net cash flows
e. Payback period The length of time it will take to recover through cash inflows the dollars of a capital outlay
f. Accounting rate of return A measure of the average income as a percent of the average investment
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