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Match the measures of worth in the first column with an appropriate definition from the list below.
Annual worth
Discounted payback period
Capitalized worth
External rate of return
Future worth Internal rate of return
Present worth
1. Converts all cash flows to a single sum equivalent at t-(planning horizon) usingiMARR
2. Converts all cash flows to a single sum equivalent at t = 0 using i = MARR
3. Converts all cash flows to an equivalent uniform series over the planning horizon
4. Determines an interest rate that yields a PW (or FW or AW) of O
5. Determines how long it takes for the cumulative present worth to be positive at iMARR
6. Determines the interest rate that equates the future worth of invested capital to the future worth of recovered capital invested at i MARR
7. Determines the PW when the planning horizon is infinitely long

Sagot :

Lanuel

Answer:

1. Future worth.

2. Present worth.

3. Annual worth.

4. Internal rate of return.

5. Discounted payback period.

6. External rate of return.

7. Capitalized worth.

Explanation:

Rate of return can be defined as the percentage of interest or dividends earned on money that is invested.

In Financial accounting, a return refers to the amount of profit generated by an investor on an investment over a specific period of time.

Basically, the rate of return which is typically expressed as a percentage of the initial costs of an investment can either be a gain or a loss on an investment. Therefore, a positive rate of return on an investment over a specific period of time, simply means that an investor is making a profit (gains) while a negative rate of return on an investment over a specific period of time, indicates that the investor is running at a loss.

The measures of worth with an appropriate definition is listed below;

1. Future worth: converts all cash flows to a single sum equivalent at t-(planning horizon) using i = MARR.

2. Present worth: converts all cash flows to a single sum equivalent at t = 0 using i = MARR

3. Annual worth: converts all cash flows to an equivalent uniform series over the planning horizon

4. Internal rate of return: determines an interest rate that yields a PW (or FW or AW) of O

5. Discounted payback period: determines how long it takes for the cumulative present worth to be positive at i = MARR.

6. External rate of return: Determines the interest rate that equates the future worth of invested capital to the future worth of recovered capital invested at i = MARR

7. Capitalized worth: Determines the PW when the planning horizon is infinitely long

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