Key Terms
- capital investment
- a major expenditure that requires a large up-front investment and is expected to generate substantial cash inflow in return
- cash flow
- the amount of cash actually flowing into and out of a business, as opposed to income (which is based on accounting rules, accruals, and reports)
- future value
- the value of an asset or holding at a point in the future based on expectations of that asset’s growth at a certain rate of return
- mixed stream
- a set of cash flows over a period of time that can vary in amount from one period to the next
- present value
- the value of an asset in today’s dollars based on future growth expectations at an assumed interest rate