a) Explain the term 'annuity'. b) What is meant by 'investment appraisal? c) Explain the term 'useful life (UL)'. d) Explain the term 'salvage value (SV)'. e) Write down the formula for 'present value interest factor of annuity (PVIFA)'. f) Write down the formula for future value interest factor of annuity (FVIFA)'. g) Explain the term 'payback period (PBP)'. h) Explain the usefulness of 'payback period (PBP)'as a method of investment analysis. i) Explain the limitations of 'payback period (PBP)'as a method of investment analysis. j) Explain the usefulness of 'average rate of return (ARR)' as a method of investment analysis.

a) Explain the term 'annuity'. b) What is meant by 'investment appraisal? c) Explain the term 'useful life (UL)'. d) Explain the term 'salvage value (SV)'. e) Write down the formula for 'present value interest factor of annuity (PVIFA)'. f) Write down the formula for future value interest factor of annuity (FVIFA)'. g) Explain the term 'payback period (PBP)'. h) Explain the usefulness of 'payback period (PBP)'as a method of investment analysis. i) Explain the limitations of 'payback period (PBP)'as a method of investment analysis. j) Explain the usefulness of 'average rate of return (ARR)' as a method of investment analysis.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 9MC: The process that determines the present value of a single payment or stream of payments to be...

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