Match the terms relating to the basic terminology and concepts of capital budgeting on the left with the descriptions of the terms on the right. Read each description carefully and type the letter of the description in the Answer column next to the correct term. These are not necessarily complete definitions, but there is only one possible answer for each term. This analysis involves a comparison of the expected and actual results for a given capital project and the development of an explanation for any disparity between them. The decision rule for this capital budgeting method states a project should be considered acceptable if its calculated return is greater than or equal to the firm's cost of capital. Also called a firm's hurdle rate, it is used as the discount rate in a firm's net present value (NPV) calculations or the basis of comparison for a project's internal rate of return (IRR). A curve showing the relationship between a project's net present value (NPV) and various discount rates. This capital budgeting technique calculates a discount rate that should be compared to a firm's cost of capital to determine whether a capital project should be accepted or rejected. The process of planning and evaluating expenditures on assets whose cash flows are expected to extend beyond one year. A capital budgeting method whose key value is calculated as the difference between the discounted value of an asset's future cash inflows and its purchase price. The acceptance or rejection decision made for this type of project does not affect the acceptance or rejection of another proposed capital project. A capital budgeting analysis that determines if a capital asset should be purchased to take the place of a worn out, damaged, or obsolete existing asset. The term used to describe the time necessary to recover the original cost of an investment from its expected cash inflows