Assets.
Future profits.
Liabilities.
Costs.
Future cash flows.
Produce a positive annual cash flow.
Produce a positive cash flow from assets.
Offset its fixed expenses.
Offset its total expenses.
Recoup its initial cost.
Discount rate that creates a zero cash flow from assets
Discount rate which results in a zero net present value for the project
Discount rate which results in a net present value equal to the project's initial cost
Rate of return required by the project 's investors
The project' s current market rate of return
Project 's initial cost
Discount rate
Timing of the project' s cash flows
Inflation rate
Real rate of return
Mutually exclusive
Conventional
Multiple choice
Dual return
Crosswise
Net present value
Internal rate of return
Profitability index
Accounting rate of return
Modified internal rate of return
Profitability index less than 1.0
Payback period greater than the requirement
Positive net present value
Positive average accounting rate of return
Internal rate of return that is less than the requirement
Decreases as the required rate of return increases.
Is equal to the initial investment when the internal rate of return is equal to the required return.
Method of analysis cannot be applied to mutually exclusive projects.
Is directly related to the discount rate.
Is unaffected by the timing of an investment's cash flows.
Payback
Profitability index
Accounting rate of return
Internal rate of return
Net present value
Average accounting return that exceeds the requirement
Payback period that is shorter than the requirement period
Positive net present value
Profitability index less than 1.0
Internal rate of return that exceeds the required return
A longer payback period is preferred over a shorter payback period.
The payback rule states that you should accept a project if the payback period is less than one year.
The payback period ignores the time value of money.
The payback rule is biased in favor of long-term projects.
The payback period considers the timing and amount of all of a project's cash flows.
Incorporation of the time value of money concept
Ease of use
Research and development bias
Arbitrary cutoff point
Long-term bias
One of the time periods within the investment period has a cash flow equal to zero
The initial cash flow is negative
The investment has cash inflows that occur after the required payback period
The investment is mutually exclusive with another investment under consideration
The cash flows are conventional
If the IRR exceeds the required return,the profitability index will be less than 1.0.
The profitability index will be greater than 1.0 when the net present value is negative.
When the internal rate of return is greater than the required return,the net present value is positive.
Projects with conventional cash flows have multiple internal rates of return.
If two projects are mutually exclusive,you should select the project with the shortest payback period.
Modified internal rate of return equal to zero
Profitability index of zero
Internal rate of return that exceeds the required return
Payback period that exceeds the required period
Negative average accounting return
Payback and net present value
Payback and internal rate of return
Internal rate of return and net present value
Net present value and profitability index
Profitability index and internal rate of return
Internal rate of return
Payback
Average accounting rate of return
Net present value
Profitability index
Internal rate of return
Modified internal rate of return
Net present value
Profitability index
Payback