Capital Budgeting Flashcards

1
Q

Capital Budgeting

A

What is Capital Budgeting? How is it used?

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2
Q

Capital Budgeting

A

What values are used in Capital Budgeting?

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3
Q

Capital Budgeting

A

When is the Present Value of $1 table used?

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4
Q

Capital Budgeting

A

When is the Present Value of an Annuity Due used?

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5
Q

Capital Budgeting

A

When is the Present Value of an Ordinary Annuity of $1 (PVOA) used?

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6
Q

Capital Budgeting

A

What is the calculation for the Present Value of $1?

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7
Q

Capital Budgeting

A

What is Net Present Value (NPV)?

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8
Q

Capital Budgeting

A

How is NPV used to calculate future benefit?

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9
Q

Capital Budgeting

A

What is the rate of return on an investment called?

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10
Q

Capital Budgeting

A

What does the Discount Rate represent?

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11
Q

Capital Budgeting

A

What are the strengths of the Net Present Value system?

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12
Q

Capital Budgeting

A

What are the weaknesses of the Net Present Value system?

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13
Q

Capital Budgeting

A

How do Salvage Value and Depreciation affect Net Present Value?

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14
Q

Capital Budgeting

A

If multiple potential rates of return are available- which is used to calculate Net Present Value?

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15
Q

Capital Budgeting

A

What is the Internal Rate of Return (IRR)?

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16
Q

Capital Budgeting

A

Which rate of return is used to re-invest cash flows for Internal Rate of Return?

17
Q

Capital Budgeting

A

How does the rate used for Internal Rate of Return (IRR) compare to that used for Net Present Value (NPV)?

18
Q

Capital Budgeting

A

What are the strengths and weaknesses of the Internal Rate of Return system?

19
Q

Capital Budgeting

A

When is NPV on an Investment positive?

20
Q

Capital Budgeting

A

When is NPV on an Investment Negative?

21
Q

Capital Budgeting

A

When is NPV Zero?

22
Q

Capital Budgeting

A

What is the Payback Method? How is it calculated?

23
Q

Capital Budgeting

A

What are the strengths of the Payback Method?

24
Q

Capital Budgeting

A

What are the weaknesses of the payback method?

25
Q

Capital Budgeting

A

What is the Accounting Rate of Return?

26
Q

Capital Budgeting

A

What are the strengths of the Accounting Rate of Return (ARR)?

27
Q

Capital Budgeting

A

What are the weaknesses of the Accounting Rate of Return (ARR)?

28
Q

Capital Budgeting

A

What is an Expected Return?