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Capital Budgeting Technique
A process of evaluating and comparing the potential expenditures or investments which are significant in amount, to determine their worthiness for funding.
Present Valued Dollar
The current value of a future sum of money or stream of cash flows given a specified rate of return.
Internal Rate of Return
A financial metric used to evaluate the profitability of potential investments, calculated as the rate of return that makes the net present value of all cash flows from a particular project equal to zero.
Reinvestment Assumption
The premise in finance that cash flows received from an investment will be reinvested at a certain rate, affecting future cash flows and the overall return.
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