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Where do the structures labeled 1 and 3 in the diagram meet?
Accounting Rate of Return
A financial ratio that measures the profitability of an investment by dividing the average annual profit by the initial investment cost.
Weighted Average Cost of Capital
The average rate of return a company is expected to pay its security holders to finance its assets, weighted by the type of capital.
Modified Internal Rate of Return (MIRR)
A financial metric that accounts for the cost of capital and reinvestment of cash flows to provide a better measure of a project's profitability than the traditional IRR.
Net Present Value (NPV)
The difference between the present value of cash inflows and the present value of cash outflows over a period of time.
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