Presented below are terms preceded by letters a through f and followed by a list of definitions 1 through 6. Match the letter of the terms with the definitions. Use the space provided preceding each definition. (a) Postaudit(b) Capital rationing(c) Profitability index (d) Net present value (e) Cost of capital(f) Annuity______ (1) Used to compare projects when a company cannot fund all positive net present value projects calculated by dividing present value of net cash flows by the initial investment.______ (2) A series of cash flows of equal dollar amount over equal time periods.______ (3) An estimate of an asset's value to the company; computed by discounting the future net cash flows using the company's required rate of return and then subtracting the initial amount

invested. ______ (4) An evaluation of a project's actual results versus its projected results.______ (5) An average of the rate the company must pay to its lenders and investors.______ (6) Finance constraints that limit a company from accepting all positive net present value investments.

What will be an ideal response?


1. C; 2. F; 3. D; 4. A; 5. E; 6. B

Business

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