Examen 2

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Created by
Gabriella Velazquez

Cards (19)

  • The Net Present Worth is the difference between the present worth of benefits and costs.
  • Inflow is money that flows to you, such as profits and incomes. 
  • Outflow is money that flow out of you, such as disbursement, payments, expenses, maintenance costs, and others.
  • To buy a bond is to lend money to the bond issuer.
  • They buyer or owner of the bond receives two types of payments: the dividend and the face value of the bond.
  • The dividends are computed as a series of periodic interest payments.
  • The other payment or face value of the bond is a single payment when the bond is retired.
  • The retirement of a bond is also called the maturity of the bond.
  • In Capitalized Worth or Cost Method the comparison is between assets assumed to have infinite life..
  • The definition of an annuity is a series of payments or receipts, all of the same amount of money, they maintain the same distance or space between them, and the first one begins at the end of the first period of time.
  • The equivalent capital recovery factor converts a lump sum (a single quantity) into an equivalent annuity.
  • The capital recovery account for both the repayment of invested capital plus the interest earned on the unrecovered portion of the investment.
  • A sinking fund is established to protect the investors by enforcing an orderly retirement of debt from current time.
  • The sinking fund is used to save money to pay a future debt disbursement.
  • The Payback Period method has been used as a measure of how fast an investment is recovered. It calculates the number of years required for cash inflows to equal the cash outflows.
  • Payback period of three years or less are desired in the US industries.
  • In the Simple Payback Period no interest is applied. In the Discounted Payback Period the interest rate is applied so when you move the cash flows to the present, the quantities decrease accordingly to the interest rate.
  • The rate of return is the yield or the profits expressed in percent.
  • MARR means the Minimum Attractive Rate of Return.