Answer:
1. Future worth.
2. Present worth.
3. Annual worth.
4. Internal rate of return.
5. Discounted payback period.
6. External rate of return.
7. Capitalized worth.
Explanation:
Rate of return can be defined as the percentage of interest or dividends earned on money that is invested.
In Financial accounting, a return refers to the amount of profit generated by an investor on an investment over a specific period of time.
Basically, the rate of return which is typically expressed as a percentage of the initial costs of an investment can either be a gain or a loss on an investment. Therefore, a positive rate of return on an investment over a specific period of time, simply means that an investor is making a profit (gains) while a negative rate of return on an investment over a specific period of time, indicates that the investor is running at a loss.
The measures of worth with an appropriate definition is listed below;
1. Future worth: converts all cash flows to a single sum equivalent at t-(planning horizon) using i = MARR.
2. Present worth: converts all cash flows to a single sum equivalent at t = 0 using i = MARR
3. Annual worth: converts all cash flows to an equivalent uniform series over the planning horizon
4. Internal rate of return: determines an interest rate that yields a PW (or FW or AW) of O
5. Discounted payback period: determines how long it takes for the cumulative present worth to be positive at i = MARR.
6. External rate of return: Determines the interest rate that equates the future worth of invested capital to the future worth of recovered capital invested at i = MARR
7. Capitalized worth: Determines the PW when the planning horizon is infinitely long
