The _____________ is the length of time that it takes for a project to recover its initial cost from the net cash inflows that it generates

1. The _____________ is the length of time that it takes for a project to recover its initial cost from the net cash inflows that it generates.

payback period

2. The difference between the present value of these cash flows, called the ____________, determines whether or not a project is an acceptable investment.

net present value

3. The ______________ is the average rate of return that the company must pay to its long-term creditors and its shareholders for the use of their funds.

cost of capital

4. are actual cash outlays for salaries, advertising, and other operating expenses.

Out-of-pocket costs

5. The _______________ is the rate of return of an investment project over its useful life

internal rate of return

6. The result, shown below in equation form, is called the

project profitability index.

7. The _____________ method is the final capital budgeting technique discussed in the chapter

simple rate of return

8. A ___________ involves checking whether or not expected results are actually realized

postaudit

9. A __________ is a detailed plan for the future that is usually expressed in formal quantitative terms

budget

10. involves developing goals and preparing various budgets to achieve those goals

Planning