Equal to year-over-year changes in gross fixed assets.

A non-cash expense.

Risk that can’t be diversified away.

Current assets minus current liabilities.

Implies that a security's expected return should be equal to the risk-free rate, to compensate for time, and beta times the market expected risk premium, to compensate for systematic risk.

A forecast typically calculated under the assumption of compound interest.

Used in present value calculations to account for the timing and riskiness of cash flows.

The idea that cash is worth more sooner rather than later.

Shows how different assumptions affect the estimated value of a project.

Rate of return required by a firm’s shareholders.

Excess return that investing in the stock market provides over a risk-free rate.

Implies that investors will pay a lower price for riskier securities, all else equal.

Also known as systematic risk.

Noncash expense deducted from gross profit and used to reduce the book value of fixed assets.

A statistical measure of total risk.

A measure of how much cash a firm generates from its projects that is free to be paid out to investors.

This value increases when the risk of bankruptcy increases.

An expense a business incurs through its normal business operations such as rent, equipment, inventory costs.

Current worth of a cash flow (or stream of cash flows).

A statistical measure used to measure a stock’s systematic (i.e., non-diversifiable) risk used in the capital asset pricing model, obtained by regressing the returns of an individual stock on a market index.

The (after-tax) opportunity cost of capital for investors.

Value generated by reinvesting returns.

A measure of how valuable a project is that accounts for the timing of cash flows.

A measure of how long it takes to recover the cost of investment.

A cash exepnse that should not be considered in NPV analysis.