Explain the Distinction Between Input and Output Measures of Capacity

question 111

Essay

Explain the distinction between input and output measures of capacity.

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Definitions:

Payback Method

A capital budgeting technique that calculates the length of time required to recoup the initial investment cost through the net cash flows it generates.

Cash Flow

Cash flow is the net amount of cash and cash-equivalents being transferred into and out of a business.

Economic Life

The expected period of time during which an asset remains useful to the owner for generating income or other benefits.

Investment Dollars

The amount of money committed to investments with the expectation of generating a future return.