Chapter 25 Flashcards
1
Q
Cash payback period
A
Cost of capital investment / Net annual cash flow
2
Q
Net present value method
A
Present value of net cash flows - capital investment = net present value
If zero or positive ACCEPT
If negative REJECT
3
Q
Net annual cash flow
A
Cash inflows received from sales - cash outflows for cost of goods sold - maintenance costs - other direct operating costs
4
Q
Internal rate of return factor
A
Capital investment / net annual cash flow
5
Q
Annual rate of return
A
Expected annual income / average investment
6
Q
Average investment
A
Original investment + value at end of useful life / 2
