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11 Cards in this Set
- Front
- Back
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WACC |
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Capital Budgeting |
Method we use to justify the acquisition of capital goods |
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Payback |
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Profitability index |
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International rate of return |
The actual rate of return of an investment, and it uses the time value of money in its calculation |
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Accounting rate of return |
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Mutually exclusive |
One is chosen and others are automatically sacrificed or excluded |
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Independent |
Investment that are not mutually exclusive are chosen because they have positive net present value |
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Capital rationing |
Constraint placed on the amount of funds that can be invested in a given time period |
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Post-audit |
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5 steps in capital budgeting |
1 Formulate a proposal 2 Evaluate the data 3 make a decision 4 follow up 5 take corrective action |
