Match each key term with the most correct definition statement.

1. Capital Cost Allowance (CCA)
2. reinvestment assumption
3. cash flow
4. internal rate of return (IRR)
5. planning horizon
6. payback period
7. net present value (NP'V)
8. mutually exclusive
9. capital rationing
10. straight line amortization
11. Investment tax credit

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Match each of the options above to the items below.

1. Has a defined annual tax deductions of 5 to 100% for different categories of assets.
2. Equals cash inflows minus cash expenses
3. The length of time it takes to conceive, develop, and complete a project and to recover the cost of the project on a discounted cash flow basis
4. Equals the present value of the cash inflows minus the present value of the cash outflows when the cost of capital is used as a discount rate.
5. Concerns the rate of return that can be earned on the cash flow generated by capital budgeting projects.
6. Is calculated by taking the amortized cost of an asset and dividing it by the useful life of the asset.
7. Reduction of taxes otherwise payable based on specified investments.
8. Indicates the length of time required to recoup an initial investment
9. Occurs when a corporation has more dollars of capital budgeting projects with positive net present values than it has money to invest in them.
10. A discounted cash flow method for evaluating capital budgeting projects where the present value of the cash inflows are equal to the present value of the cash outflows.
11. The selection of one choice precludes the selection of any other competitive choice.