Match These Terms with Their Correct Definition

question 139

Multiple Choice

Match these terms with their correct definition.
-A transaction that represents both an investing and financing activity but that does not involve the receipt or payment of cash.

• A)Cash flow adequacy ratio
• B)Cash flows from financing activities
• C)Cash flows from investing activities
• D)Cash flow from operating activities
• E)Direct method
• F)Free cash flow
• G)Income statement
• H)Indirect method
• I)Noncash investing & financing activities
• J)Statement of cash flows

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Definitions:

NPV

Net Present Value, a calculation that represents the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Discount Rate

The interest rate that a central bank charges financial institutions for short-term loans, or used in discounted cash flow (DCF) analysis to present value future cash flows.

APR

The Annual Percentage Rate, which is the interest rate for a whole year on a loan, including fees.

Present Value Payback Period

A capital budgeting technique that calculates the period of time required for the present value of future cash flows to cover the initial investment cost.