term minimum acceptable rate return investment quizlet

What term is used for the minimum acceptable rate of return on an investment quizlet?

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Consider the following projects: Project A: cost = $30,000, NPV of cash flows = $10,000; Project B: cost = $45,000, NPV of cash flows = $10,000; Project C: cost = $30,000, NPV of cash flows = $20,000; Project D: cost = $40,000, NPV of cash flows = $5,000. Using profitability index as the evaluation method, rank the projects in order of preference with the best choice on top.

3.75 years.
Reason:
($45,000)-(15,000x.9091)=($31,363).( $31,363)-(15,000x.8264)=($18,967).( $18,967)-(15,000x.7513)=($7,697). $7,697/(15,000x.6830)=.75. 3 years +0.75=3.75 years.

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What is the rate of return of an investment quizlet?

The return on investment formula is: ROI = (Net Profit / Cost of Investment) x 100.

What is the IRR quizlet?

Internal rate of return approach (IRR) Evaluates a project by determining the discount rate that equates the present value of the project's future cash inflows with the present value of the project's cash outflows. The IRR is the discount rate where NPV equals 0.

What does ROI stand for quizlet?

Return on Investment (ROI)

Which of the following is also called required rate of return?

The RRR is also known as the hurdle rate, which like RRR, denotes the appropriate compensation needed for the level of risk present. Riskier projects usually have higher hurdle rates, or RRRs, than those that are less risky.

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