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Capital Budgeting
The process by which investors determine the value of potential investments or projects by assessing the cash inflows and outflows associated with them.
Conventional Cash Flows
A series of inward and outward cash flows over time where there is typically one initial outflow followed by several inflowing cash amounts.
Profitability Index
The Profitability Index is a financial metric that compares the present value of future cash flows generated by a project to the initial investment, used to assess the attractiveness of an investment.
Average Accounting Return
A method of measuring an investment's profitability by comparing its average net income to its average book value.
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