Capital Budgeting Flashcards
Capital Budgeting
What is Capital Budgeting? How is it used?
Capital Budgeting
What values are used in Capital Budgeting?
Capital Budgeting
When is the Present Value of $1 table used?
Capital Budgeting
When is the Present Value of an Annuity Due used?
Capital Budgeting
When is the Present Value of an Ordinary Annuity of $1 (PVOA) used?
Capital Budgeting
What is the calculation for the Present Value of $1?
Capital Budgeting
What is Net Present Value (NPV)?
Capital Budgeting
How is NPV used to calculate future benefit?
Capital Budgeting
What is the rate of return on an investment called?
Capital Budgeting
What does the Discount Rate represent?
Capital Budgeting
What are the strengths of the Net Present Value system?
Capital Budgeting
What are the weaknesses of the Net Present Value system?
Capital Budgeting
How do Salvage Value and Depreciation affect Net Present Value?
Capital Budgeting
If multiple potential rates of return are available- which is used to calculate Net Present Value?
Capital Budgeting
What is the Internal Rate of Return (IRR)?
Capital Budgeting
Which rate of return is used to re-invest cash flows for Internal Rate of Return?
Capital Budgeting
How does the rate used for Internal Rate of Return (IRR) compare to that used for Net Present Value (NPV)?
Capital Budgeting
What are the strengths and weaknesses of the Internal Rate of Return system?
Capital Budgeting
When is NPV on an Investment positive?
Capital Budgeting
When is NPV on an Investment Negative?
Capital Budgeting
When is NPV Zero?
Capital Budgeting
What is the Payback Method? How is it calculated?
Capital Budgeting
What are the strengths of the Payback Method?
Capital Budgeting
What are the weaknesses of the payback method?
