Capital budgeting & Internal rate of return - Unionpedia, the concept map

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Difference between Capital budgeting and Internal rate of return

Capital budgeting vs. Internal rate of return

Capital budgeting in corporate finance, corporate planning and accounting is an area of capital management that concerns the planning process used to determine whether an organization's long term capital investments such as new machinery, replacement of machinery, new plants, new products, and research development projects are worth the funding of cash through the firm's capitalization structures (debt, equity or retained earnings). Internal rate of return (IRR) is a method of calculating an investment's rate of return.

Accounting rate of return

The accounting rate of return, also known as average rate of return, or ARR, is a financial ratio used in capital budgeting.

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Cost of capital

In economics and accounting, the cost of capital is the cost of a company's funds (both debt and equity), or from an investor's point of view is "the required rate of return on a portfolio company's existing securities".

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Discounted cash flow

The discounted cash flow (DCF) analysis, in financial analysis, is a method used to value a security, project, company, or asset, that incorporates the time value of money.

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Inflation

In economics, inflation is a general increase in the prices of goods and services in an economy.

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Interest rate

An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum).

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Modified internal rate of return

The modified internal rate of return (MIRR) is a financial measure of an investment's attractiveness.

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Net present value

The net present value (NPV) or net present worth (NPW) is a way of measuring the value of an asset that has cashflow by adding up the present value of all the future cash flows that asset will generate.

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Return on investment

Return on investment (ROI) or return on costs (ROC) is the ratio between net income (over a period) and investment (costs resulting from an investment of some resources at a point in time).

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