Accounting 203 Chapter 13 Key Terms

A decision as to whether a proposed investment project is acceptable

Is the minimum rate of return a project must yield to be acceptable

A decision in which the alternatives must be ranked

A decision in which the alternatives must be ranked

The concept that a dollar today is worth more than a dollar a year from now.

The length of time that it takes for a project to fully recover its initial cost out of the net cash inflows that it generates.

The difference between the present value of an investment project’s cash inflows and the present value of its cash outflows. (p. 589)

The average rate of return a company must pay to its long-term creditors and shareholders for the use of their funds

Actual cash outlays for salaries, advertising, repairs, and similar costs. (p. 594)

The discount rate at which the net present value of an investment project is zero; the rate of return of a project over its useful life

The process of planning significant investments in projects that have long-term implications such as the purchase of new equipment or the introduction of a new product. (p. 584)