An Increased Availability of Computers and fiNancial Calculators to Handle

question 94

True/False

An increased availability of computers and financial calculators to handle the more complex
computations may have contributed to the change in the primary methods used by chief financial
officers to evaluate projects over the past forty years.

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Definitions:

Discounted Cash Flow

A valuation method used to estimate the attractiveness of an investment opportunity by calculating the present value of expected future cash flows using a discount rate.

Cash Payback Period

The duration of time it takes for an investment to generate enough cash flow to recover its initial outlay.

Straight-Line Method

A technique for figuring out an asset's depreciation, apportioning a consistent depreciation value annually throughout the asset's lifespan.

Net Present Value

Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time, used in capital budgeting to assess the profitability of an investment.