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Profitability Index
A calculation that determines the relationship between the costs and benefits of a proposed project through the ratio of present value of future cash flows over the initial investment.
Mutually Exclusive Projects
Projects in which the acceptance of one project will exclude the acceptance of the other projects due to constraints.
IRR
Internal Rate of Return; a financial metric used to evaluate the profitability of a potential investment, calculating the discount rate at which the net present value of costs and benefits equals zero.
Cost of Capital
The necessary rate of earnings a firm must obtain from its investments to preserve its market worth and secure capital.
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