Corporate Finance > Chapter 8 - Net Present Value and Other Investment Criteria > Flashcards
Chapter 8 - Net Present Value and Other Investment Criteria Flashcards
Understand:
- The reasons why the net present value criterion is the best way to evaluate proposed investments.
- The payback rule, and some of its shortcomings.
- The discounted payback rule, and some of its shortcomings.
- Accounting rates of return, and some of the problems with them.
- The internal rate of return criterion, and its strengths and weaknesses.
- The modified internal rate of return.
- The profitability index, and its relation to net present value.
