Discover published sets by community

NPV is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. It's crucial for determining the profitability of an investment.

IRR is the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero. It's important for comparing the profitability of different investments.

Payback Period is the amount of time it takes for an investment to generate an amount of cash flow equal to the initial investment. It's a simple measure of investment liquidity.

Discounted Payback Period accounts for the time value of money by discounting the cash flows before calculating the payback period. It provides a more accurate reflection of an investment's viability.

PI is the ratio of the present value of future cash flows to the initial investment. It's used to rank investments based on their profitability.

Capital Rationing is the process of selecting the best projects to invest in when funds are limited. It's important for maximizing a firm's value within capital constraints.

Cost of Capital is the required return necessary to make a capital budgeting project, such as building a new hotel, worthwhile. It includes the cost of debt and equity.

ARR is the average annual profit of a project compared to the initial investment. While simpler than other methods, it does not consider the time value of money.

Break-Even Analysis determines the level of sales needed to cover the costs of a project. It's important for understanding the minimum performance needed for profitability.

Real Options provide the opportunity to make managerial decisions that affect the capital budgeting in response to changes in the market. They add value by incorporating flexibility in project planning.

Sensitivity Analysis examines how project profitability is affected by changes in key variables. It's important for risk assessment and understanding which variables impact the project's outcome.

Scenario Analysis evaluates a project's potential outcomes under different scenarios. It aids in preparing for various possible future states and the risks associated with them.

CapEx refers to the funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, technology, or equipment. It's significant for long-term strategic planning in hospitality.

Operating Cash Flow is the cash generated from the normal operations of a business. In hospitality, it's critical for funding day-to-day operations and capital budgeting projects.