Ch. 8 NPV Flashcards

0
Q

NPV

A

PV of CF - investment

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1
Q

Opportunity cost of capital

A

Expected rate of return given up by investing in a project

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2
Q

Equivalent annual annuity

A

PV of Costs/annuity factor

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3
Q

IRR

A

Discount rate at which NPV=0

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4
Q

Profitability index

A

NPV/investment

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5
Q

Capital rationing

A

Limit set on the amount of funds available for investment.

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