Exam 23: Supplement F Financial Analysis

The amount to be invested now to accumulate to a certain amount in the future at a specified interest rate is called the:

The interest rate is also called the discount rate.

The ________ is the concept that a dollar in hand today is worth more than a dollar to be received in the future.

Nathan would have to wait until he was 35 to receive his inheritance, which was entirely too long in light of his impressive shopping list. He had almost given up hope when he saw an interesting offer one afternoon while watching television. In the advertisement, a company expressed a willingness to give him cash now if he would sign over his inheritance 11 years from now. If they use a 15% interest rate, what percentage of his inheritance will Nathan receive today?

The process by which interest on an investment accumulates and then earns interest itself for the remainder of the investment period is called ________.

Straight-line depreciation is an accelerated depreciation method.

________ is the cash that will flow into and out of the organization.

A poultry farmer is interested in purchasing an industrial egg tester that can measure weight, albumin height, yolk color, and Haugh units all at the touch of a button. The unit will cost $6900 and is expected to last 10 years at which point it can be sold for $1,000 to a farmer in a less stringently controlled egg market. What is the annual depreciation for year 4 under the MACRS method? A copy of Table F.3 is appended to your exam.

Explain the time-value-of-money concept.

Depreciation:

The cash flow from the sale or disposal of plant and equipment at the end of a project's life is its ________.

It is estimated that the cost for the first year of college at Massive University, the state school with the best operations management program, will be $60,000 by the time your son is ready to enroll as a student. If prevailing interest rates will average 5 percent, what amount should you invest now to pay his first year's tuition eight years from now?

________ is an allowance for the consumption of capital.

The ________ method of calculating annual depreciation is the simplest, and usually is adequate for internal planning purposes.

A(n) ________ is a series of payments of a fixed amount for a specified number of years.

In the formula P = $\frac{F}{(1+r)^{n}}$ the term r is ________.

What are the different types of depreciation? What are the advantages and disadvantages of each?

Which of the following is an accelerated depreciation method?

The NCX10 now features a coffee brewing subassembly, so Alex budgets the following cash outlays and incomes for the next five years. If the interest rate is 8%, what is the present value of this investment after the second year?

What are the problems and advantages of managing by the numbers?