Chapter 23 Flashcards
Sunk costs, out-of-pocket costs, and opportunity costs are all examples of ________ costs.
relevant
A(n) _______ cost arises from a past decision and cannot be avoided or changed; it is irrelevant to future decisons.
sunk
A(n) _______ cost requires a future outlay of cash and is relevant for current and future decision making. They are usually the direct result of management’s decisions.
out-of-pocket
An _________ cost is a potential benefit lost by taking a specific action when two or more alternative choices are available.
opportunity
The additional or incremental revenue generated by selecting a particular course of action over another
Relevant benefits
Eliminate a segment when ________ exceed ________.
costs, revenues
_________ budgeting analyzes long-term investment and decides what assets to acquire or sell.
Capital
________ _________ decisions require careful analysis because they are usually the most difficult and risky decisions that managers make.
Capital budgeting
Methods that use the time value of money are _______ ________ Value and ________ rate of return.
net present, internal
When an asset’s expected cash flows are discounted at the required rate and yield a positive net present value, the asset should be acquired
Net present value decision rule
A series of cash flows with equal number amounts
Annuity
3 years with a payment of 10,000 each year is an example of a(n) _________.
annuity
The minimum acceptable rate of return is the _______ rate.
hurdle
