Matching Quiz

Match the following terms to its definitions.


1				Capital budgeting


2				Screening decisions


3				Preference decisions


4				Net present value


5				Working capital


6				Weighted-average cost of capital (WACC)


7				Internal rate of return (IRR)


8				Required rate of return


9				Project profitability index


10				Post-audit


11				Payback period


12				Simple rate of return


13				Present value


14				Compound interest


15				Discounting


16				Discount rate


17				Annuity


18				After-tax cost


19				After-tax benefit


20				Capital cost allowance (CCA)


21				Capital cost allowance tax shields


22				Undepreciated capital cost (UCC)

Answer choices for questions 1 through 22

A)	The process of planning significant outlays on projects that have long-term implications, such as purchasing new equipment or introducing a new product.
B)	The average rate of return companies must provide to long-term creditors and shareholders for the use of their funds.
C)	The value now of an amount that will be received in some future period.
D)	The process of finding the present value of a future cash flow.
E)	Reductions in tax payments caused by capital cost allowance deductions.
F)	The remaining book value of an asset class or pool of assets that is available for tax-deductible depreciation (capital cost allowance).
G)	The net amount of cash inflow realized from a taxable cash receipt after income tax effects have been considered.
H)	The minimum rate of return that an investment project must yield to be acceptable.
I)	The net amount of cash outflow resulting from a tax-deductible cash expense after the income tax effects have been considered.
J)	The ratio of the present value of a project's cash inflows to the investment required.
K)	Decisions as to whether a proposed investment passes a pre-established profitability hurdle.
L)	The excess of current assets over current liabilities.
M)	Following up on a project that has been approved to see if expected results are being realized.
N)	The rate of return computed by dividing a project's annual operating income by the initial investment required.
O)	The amount of depreciation expense allowed by the Canada Revenue Agency for tax purposes.
P)	Decisions as to which of several competing acceptable investment proposals is best.
Q)	The length of time that it takes for a project to recover its initial cost from the net cash inflows that it generates.
R)	A series of equal cash payments or receipts.
S)	The rate used to calculate the present value of future cash flows.
T)	The difference between the present value of the cash inflows and the present value of the cash outflows associated with an investment project.
U)	The discount rate at which the net present value of an investment project is zero.
V)	The process of paying interest on interest for an investment.

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