Chapter 13 Capital Budgeting Flashcards
1
Q
Simple interest
A
v = x + ( x + r + n )
2
Q
Compound interest
A
V = X(1 + r)n
3
Q
Effective interest
A
r = (1 + i/n)n – 1
4
Q
Discounting factor
A
1 /(1+r)n or (1+r)-n
5
Q
Present value
A
Future value × discount factor
6
Q
Payback period
A
initial investment/annual cash flows
7
Q
IRR
A
= L +( NL/NL – NH) × (H – L)
8
Q
Future value
A
PV(1+r)n
9
Q
net present value NPV
A
PV of future benefits - Present value of investment
10
Q
AF annuity
A
1-(1+r)-n/r
