Listed below are eight technical accounting terms introduced or emphasized in this chapter.

Capital budgeting

Payback period

Discounting

Annuity

Return on average investment

Average investment

Incremental cash flows

Net present value

Required: Each of the following statements may (or may not) describe one of these technical terms. In the space provided beside each statement, indicate the accounting term described, or answer "None" if the statement does not correctly describe any of the terms.

____ (a) The process of analyzing investments in plant assets. ____ (b) The number of years required to recover the entire cost of an investment from its net cash flows. ____ (c) A stream of equal cash flows to be received or paid. ____ (d) The estimated average annual income of an investment expressed as a percentage of its average initial cost. ____ (e) The numerator in the return on average investment computation. ____ (f) The amount an investor should be willing to pay today for the right to receive a specified amount of cash at a specified future date. ____ (g) The process of computing the present value of future cash flows.