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NPV
Net Present Value; a calculation used to determine the value of an investment by subtracting the present values of cash outflows (including initial cost) from the present values of cash inflows over a period of time.
IRR
Internal Rate of Return; the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.
Cost of Capital
The required return necessary to make a capital budgeting project, such as building a new plant, worthwhile.
Capital Rationing
In capital budgeting, the process of allocating available capital among projects to maximize total NPV.
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