Match the Items Below by Entering the Appropriate Code Letter

Match the items below by entering the appropriate code letter in the space provided.
A. Incremental analysis F. Cash payback technique
B. Opportunity cost G. Hurdle or cutoff rate
C. Discounted cash flow technique H. Net present value method
D. Capital budgeting I. Sunk cost
E. Annual rate of return technique J. Internal rate of return method
____ 1. A cost that cannot be changed by any present or future decision.
____ 2. A capital budgeting technique that considers both the estimated total cash inflows from the investment and the time value of money.
____ 3. A method used in capital budgeting in which cash inflows are discounted to their present value and then compared to the capital outlay required by the capital investment.
____ 4. The process of identifying the financial data that change under alternative courses of action.
____ 5. A method used in capital budgeting that results in finding the interest yield of the potential investment.
____ 6. The minimum rate of return management requires on an investment.
____ 7. The determination of the profitability of a capital expenditure by dividing expected annual net income by the average investment.
____ 8. The potential benefit that may be lost from following an alternative course of action.
____ 9. The process of making capital expenditure decisions in business.
____ 10. A capital budgeting technique that identifies the time period required to recover the cost of a capital investment from the annual cash inflow produced by the investment.

Correct Answer:

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1. I 6. G
2. C 7. E
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