| A) | The rate that equates the net present value of a project’s cash inflows and outflows to zero.
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| B) | The process of analyzing alternative investments and deciding which assets to acquire or sell.
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| C) | A minimum acceptable rate of return; used when interpreting the internal rate of return.
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| D) | A future cost that differs between alternatives in a particular business decision; also called an avoidable cost or differential cost.
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| E) | The differential revenue that is generated by selecting a particular course of action over another.
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| F) | An expense (or cost) that is not relevant for decision making; an expense that would continue regardless of the decision made.
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| G) | An expense (or cost) that is relevant for decision making; an expense that is not incurred if a segment, product, or service is eliminated.
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| H) | An additional cost incurred when a company pursues a certain course of action; also called a differential cost.
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| I) | A time-based measure used to evaluate a potential investment; the time expected to pass before the net cash flows from an investment equal its initial cost.
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| J) | A cost that cannot be avoided or changed in any way because it arises from a past decision; irrelevant to future decisions.
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| K) | A cost incurred or avoided as a result of management’s decisions; requires a future outlay of cash.
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| L) | A rate used to evaluate a potential investment; equals the after-tax periodic income from the project divided by the average investment in the asset; also called return on average investment.
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| M) | The process or restating future cash flows in terms of their present value.
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| N) | Contribution margin less traceable or direct fixed costs.
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| O) | A dollar amount used to evaluate a potential investment; an estimate of an asset’s value to the company, computed by discounting the future cash flows from the investment at a satisfactory rate and then subtracting the initial cost of the investment.
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| P) | The costs that represent the potential benefits lost by choosing an alternative course of action.
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