2. Match each of the following terms with the appropriate definition.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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2. Match each of the following terms with the appropriate definition.
The time expected to
recover the cash initially
invested in a project.
A minimum acceptable rate
of return on a potential
investment.
1. Discounting
A return on investment
which results in a zero net
present value.
2. Net Present Value
A comparison of the cost of
3. Capital Budgeting
an investment to its
projected cash flows at a
single point in time.
4. Accounting Rate of Return
5. Net Cash Flow
A capital budgeting method
focused on the rate of
return on a project's
average investment.
6. Internal Rate of Return
7. Payback Period
The process of restating
future cash flows in terms
8. Hurdle Rate
of present time value.
Cash inflows minus cash
outflows for the period.
A process of analyzing
alternative long-term
investments.
>
Transcribed Image Text:2. Match each of the following terms with the appropriate definition. The time expected to recover the cash initially invested in a project. A minimum acceptable rate of return on a potential investment. 1. Discounting A return on investment which results in a zero net present value. 2. Net Present Value A comparison of the cost of 3. Capital Budgeting an investment to its projected cash flows at a single point in time. 4. Accounting Rate of Return 5. Net Cash Flow A capital budgeting method focused on the rate of return on a project's average investment. 6. Internal Rate of Return 7. Payback Period The process of restating future cash flows in terms 8. Hurdle Rate of present time value. Cash inflows minus cash outflows for the period. A process of analyzing alternative long-term investments. >
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