Matching Questions 94. Presented below are terms preceded by letters (a) through (g) and followed by a list of definitions (1) through (7). Match the letter of the term with the definition. Use...

Matching Questions

94. Presented below are terms preceded by letters (a) through (g) and followed by a list of definitions (1) through (7). Match the letter of the term with the definition. Use the space provided preceding each definition.
(a) Net present value
(b) Capital budgeting
(c) Accounting rate of return
(d) Net cash flow
(e) Internal rate of return
(f) Payback period
(g) Hurdle rate
__________ (1) A discount rate that results in a net present value of zero.
__________ (2) Cash inflows minus cash outflows for the period.
__________ (3) A minimum acceptable rate of return.
__________ (4) The time expected to pass before the net cash flows from an investment equals its initial cost.
__________ (5) Annual after-tax net income divided by annual average investment.
__________ (6) A process of analyzing alternative long-term investments.
__________ (7) Initial cost of an investment subtracted from discounted future cash flows from the investment.

95. Presented below are terms preceded by letters (a) through (f) and followed by a list of definitions (1) through (6). Match the letter of the terms with the definitions. Use the space provided preceding each definition.
(a) Discounting
(b) Break-even time
(c) Return on average investment
(d) Net present value
(e) Uneven cash flows
(f) Accounting rate of return
__________ (1) Annual after-tax net income divided by annual average investment.
__________ (2) A rate used to evaluate the acceptability of an investment; equals the after-tax periodic income divided by the average investment in the asset.
__________ (3) An estimate of an asset's value to the company; calculated by discounting the future cash flows from the investment at a satisfactory rate and then subtracting the initial cost of the investment.

__________ (4) Cash flows that are not all equal in amount.
__________ (5) The process of restating future cash flows in terms of their present value.
__________ (6) A measure of the amount of time needed for the present value of the net cash flows to equal the initial cost of an investment.