{"id":592,"date":"2023-03-28T16:37:33","date_gmt":"2023-03-28T16:37:33","guid":{"rendered":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/?post_type=chapter&p=592"},"modified":"2023-04-03T03:55:41","modified_gmt":"2023-04-03T03:55:41","slug":"key-terms-4","status":"publish","type":"chapter","link":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/chapter\/key-terms-4\/","title":{"raw":"Glossary of Key Terms","rendered":"Glossary of Key Terms"},"content":{"raw":"
\r\n \t
\r\n

Chapter 10 Glossary of Key Terms<\/h2>\r\n<\/dt>\r\n \t
<\/dt>\r\n \t
capital budgeting<\/dt>\r\n \t
the process a business follows to evaluate potential major projects or investments<\/dd>\r\n<\/dl>\r\n
\r\n \t
discounted payback period<\/dt>\r\n \t
the length of time it will take for the present value of the future cash inflows of a project to equal the initial cost of the investment<\/dd>\r\n<\/dl>\r\n
\r\n \t
equal annuity approach<\/dt>\r\n \t
a method of comparing projects of different lives by assuming that the projects can be repeated forever<\/dd>\r\n<\/dl>\r\n
\r\n \t
internal rate of return (IRR)<\/dt>\r\n \t
the discount rate that sets the NPV of a project equal to zero<\/dd>\r\n<\/dl>\r\n
\r\n \t
modified internal rate of return (MIRR)<\/dt>\r\n \t
the yield that sets the future value of the cash inflows of a project equal to the present value of the cash outflows of the project<\/dd>\r\n<\/dl>\r\n
\r\n \t
mutually exclusive projects<\/dt>\r\n \t
projects that compete against each other so that when one project is chosen, the other project cannot be done<\/dd>\r\n<\/dl>\r\n
\r\n \t
net present value (NPV)<\/dt>\r\n \t
the present value of the cash inflows of a project minus the present value of the cash outflows of the project<\/dd>\r\n<\/dl>\r\n
\r\n \t
payback period<\/dt>\r\n \t
the length of time it will take for a company to make enough money from an investment to recover the initial cost of the investment<\/dd>\r\n<\/dl>\r\n
\r\n \t
profitability index (PI)<\/dt>\r\n \t
the present value of cash inflows divided by the present value of cash outflows<\/dd>\r\n<\/dl>\r\n
\r\n \t
replacement chain approach<\/dt>\r\n \t
a method of comparing projects of differing lives by repeating shorter projects multiple times until they reach the lifetime of the longest project<\/dd>\r\n<\/dl>\r\n \r\n\r\nAttribution:<\/strong>\r\n\r\nThis chapter is from \u201cPrinciples of Finance\u201d \u00a0https:\/\/openstax.org\/books\/principles-finance\/pages\/1-why-it-matters<\/a> by Dahlquist and Knight. This book is licensed under the CC-BY<\/a> 4.0 license. 2022 OpenStax.\r\n\r\nhttps:\/\/openstax.org\/books\/principles-finance\/pages\/1-key-terms<\/a>\r\n\r\nAccess for free at https:\/\/openstax.org\/books\/principles-finance\/pages\/16-key-terms<\/a>","rendered":"
\n
\n<\/dt>\n
<\/dt>\n
capital budgeting<\/dt>\n
the process a business follows to evaluate potential major projects or investments<\/dd>\n<\/dl>\n
\n
discounted payback period<\/dt>\n
the length of time it will take for the present value of the future cash inflows of a project to equal the initial cost of the investment<\/dd>\n<\/dl>\n
\n
equal annuity approach<\/dt>\n
a method of comparing projects of different lives by assuming that the projects can be repeated forever<\/dd>\n<\/dl>\n
\n
internal rate of return (IRR)<\/dt>\n
the discount rate that sets the NPV of a project equal to zero<\/dd>\n<\/dl>\n
\n
modified internal rate of return (MIRR)<\/dt>\n
the yield that sets the future value of the cash inflows of a project equal to the present value of the cash outflows of the project<\/dd>\n<\/dl>\n
\n
mutually exclusive projects<\/dt>\n
projects that compete against each other so that when one project is chosen, the other project cannot be done<\/dd>\n<\/dl>\n
\n
net present value (NPV)<\/dt>\n
the present value of the cash inflows of a project minus the present value of the cash outflows of the project<\/dd>\n<\/dl>\n
\n
payback period<\/dt>\n
the length of time it will take for a company to make enough money from an investment to recover the initial cost of the investment<\/dd>\n<\/dl>\n
\n
profitability index (PI)<\/dt>\n
the present value of cash inflows divided by the present value of cash outflows<\/dd>\n<\/dl>\n
\n
replacement chain approach<\/dt>\n
a method of comparing projects of differing lives by repeating shorter projects multiple times until they reach the lifetime of the longest project<\/dd>\n<\/dl>\n

 <\/p>\n

Attribution:<\/strong><\/p>\n

This chapter is from \u201cPrinciples of Finance\u201d \u00a0https:\/\/openstax.org\/books\/principles-finance\/pages\/1-why-it-matters<\/a> by Dahlquist and Knight. This book is licensed under the CC-BY<\/a> 4.0 license. 2022 OpenStax.<\/p>\n

https:\/\/openstax.org\/books\/principles-finance\/pages\/1-key-terms<\/a><\/p>\n

Access for free at https:\/\/openstax.org\/books\/principles-finance\/pages\/16-key-terms<\/a><\/p>\n","protected":false},"author":101,"menu_order":1,"template":"","meta":{"pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-592","chapter","type-chapter","status-publish","hentry"],"part":38,"_links":{"self":[{"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/pressbooks\/v2\/chapters\/592","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/wp\/v2\/users\/101"}],"version-history":[{"count":5,"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/pressbooks\/v2\/chapters\/592\/revisions"}],"predecessor-version":[{"id":1290,"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/pressbooks\/v2\/chapters\/592\/revisions\/1290"}],"part":[{"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/pressbooks\/v2\/parts\/38"}],"metadata":[{"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/pressbooks\/v2\/chapters\/592\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/wp\/v2\/media?parent=592"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/pressbooks\/v2\/chapter-type?post=592"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/wp\/v2\/contributor?post=592"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/wp\/v2\/license?post=592"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}