Capital budgeting: The process of planning significant outlays on projects that have long-term implications,
such as the purchase of new equipment or the introduction of a new product.
Screening decision: A decision as to whether a proposed investment meets some pre-established profitability
Preference decision: A decision as to which of several competing acceptable investment proposals is best.
Net present value: The difference between the present value of the cash inflows and the present value of the
cash outflows associated with an investment project.
Working capital: The excess of current assets over current liabilities.
Cost of capital: The average rate of return companies must pay to long-term creditors and shareholders for the
use of their funds.