Economics

end of each year

when altering the value of any one of the variables in a situation, holding all other values constant, find the value for the variable that makes the 2 alternatives economically equal

the percent of capacity of operation for a manufacturing plant at which income will cover expenses

period of time required for the profit or other benefits of an investment to equal the cost of an investment (cost/savings or investments / benefits)

the chance of an outcome other than what is planned to occur or expected to occur

money today is not equal to money at any other point in time

365

infinity

interest rate that makes annual benefit equal to annual cost (want the highest RoR possible)

subtracting lower intitial cost alternative cash flows from higher initial cost cash flows

higher cost

lower cost

present value of all future transactions of the bond (interest payments and repayment)

1. Rank alternatives in terms of increasing intitial investment starting with do nothing ($0) 2. Compare first two alternatives (if B/C > 1, go with higher cost alternative) 3. Continue comparing alternatives until the final one is chosen (if one has already lost, do not test it again)

the same

compounding period

higher