Capital budgeting bingo

Exercise and reference answers

Clues and terms

1. Clue

   Years to get outlay back.

   Item

   Payback

2. Clue

   Its main advantage.

   Item

   Simplicity

3. Clue

   Its main flaw.

   Item

   No timing

4. Clue

   Fixes that flaw.

   Item

   Disc payback

5. Clue

   Today's value, netted.

   Item

   NPV

6. Clue

   Rate where value is nil.

   Item

   IRR

7. Clue

   Benefit over cost.

   Item

   Profit index

8. Clue

   Only one can be chosen.

   Item

   Exclusive

9. Clue

   The proper discount rate.

   Item

   Cost of cap

Instructions

Read each clue and tap the term or value it describes.

Explanation