What are some problems associated with using the internal rate of return (IRR) method? Multiple IRRs, no scale problem, timing problem Single IRR, no scale problem, no timing problem Single IRR, scale problem, timing problem Multiple IRRs, scale problem, timing problem

Multiple IRRs, scale problem, timing problem

Financial Management Flashcards: Time Value of Money & Capital Budgeting

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Finance - Personal Finance

michael1tekrzp Created by 10 mon ago

Cards in this deck(35)

What principle states that a dollar received today is worth more than a dollar received in the future?

What is the expected rate of return given up by investing in a project called?

What is the formula \[ PV imes (1 + r)^t \] used to calculate?

What does the formula \[ rac{FV}{(1 + r)^t} \] calculate?

What is the amount at a present time that is equivalent to a series of payments and interest in the future called?

What is the present value of current and future benefits minus the present value of current and future costs?

What is the amount of time required for an investment to generate cash flows sufficient to recover its initial cost?

What is the discount rate that makes the NPV of an investment zero, and when should a project be accepted based on this rate?

What is the present value of an investment's future cash flows divided by its initial cost also known as?

What are some problems associated with using the internal rate of return (IRR) method?

What is the cost of capital at which the NPV profiles of two projects cross and their NPVs are equal?

What is a cost that has already been incurred and is not relevant for present decision-making?

What type of costs are marketing research expenses considered as?

What are the costs called when cash flow is transferred to a new project from sales and customers of other products of the firm?

What is the formula \[ (Revenue - Costs - Depreciation) imes (1 - T) + Depreciation \] used to calculate?

What is the difference between current assets and current liabilities known as?

What effect describes the relationship between nominal returns, real returns, and inflation?

What type of stock assumes dividends will remain the same forever, calculated as \[ P = rac{Div}{R} \]?

What is the present value of a zero growth stock also known as?

What is a stock whose dividends are expected to grow forever at a constant rate called?

What is a stock whose dividends grow at different rates for the foreseeable future, then grow constantly thereafter?

What formula is calculated as retention ratio multiplied by return on retained earnings?

What is the formula \[ 1 - rac{ ext{dividend per share}}{ ext{earnings per share}} \] used to calculate?

What does the net present value of growth opportunities (NPVGO) represent in the value of a firm?

What happens when there is an increase in a firm's retention rate?

What is the price-earnings ratio (P/E ratio) calculated as?

What is the enterprise value ratio calculated as?

What are economic profits calculated as?

What does operating efficiency measure in a company?

What is income before interest expense but after tax known as?

How can capital efficiency be measured in a company?

What is a measure of total efficiency known as?

What is the difference between the market value of a corporation and the capital contributed by shareholders and lenders?

What are the three strategies to create economic value?

How is cash measured in relation to rate?

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Financial Management Flashcards: Time Value of Money & Capital Budgeting

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