Term
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Definition
| the process of evaluating and selecting long-term investments that are consistent with the firm's goal of maximizing owner wealth |
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Term
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Definition
| an outlay of funds by the firm that is expected to produce benefits over a period of time greater than 1 year |
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Term
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Definition
| an outlay of funds by the firm resulting in benefits received within 1 year |
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Term
| capital budgeting process |
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Definition
| five distinct but interrelated steps: proposal generation, review and analysis, decision making, implementation, and follow-up |
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Term
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Definition
| projects whose cash flows are unrelated or independent of one another; the acceptance of one does not elimante the others from further consideration |
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Term
| mutually exclusive projects |
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Definition
| projects that compete with one another, so that the acceptance of one eliminates from further consideration all other projects that serve a similar function |
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Term
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Definition
| the financial situation in which a firm is able to accept all independent projects that provide an acceptable return |
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Term
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Definition
| The financial situation in which a firm has only a fixed number of dollars available for capital expenditures, and numerous projects compete for these dollars. |
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Term
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Definition
| The evaluation of capital expenditure proposals to determine whether they meet the firm's minimum acceptance criterion |
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Term
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Definition
| The ranking of capital expenditure projects on the basis of some predetermined measure, such as the rate of return |
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Term
| conventional cash flow pattern |
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Definition
| An initial outflow followed only by a series of inflows |
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Term
| nonconventional cash flow pattern |
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Definition
| An initial outflow followed by a series of inflows and outflows |
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Term
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Definition
the incremental cash outflow (investment) and resulting subsequent inflows associated with a proposed capital expenditure
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Term
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Definition
| the additional cash flows-outflows or inflows-expected to result from a proposed capital expenditure |
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Term
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Definition
| the relevant cash outflow for a proposed project at time zero |
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