Exam 2: Introduction to Spreadsheet Modeling

An important property of the exponential function is that:

Which of the following is a useful tool for investigating what-if questions?

The NPV function takes two arguments; the discount rate and the number of time periods in the model.

The HLOOKUP function works exactly the same as the VLOOKUP function, except the lookup table is arranged in columns instead of rows.

Exhibit 2-1A t-shirt company is planning a production run for an event where the attendance (and thus demand for t-shirts) is uncertain. The event planners have indicated that they think the attendance will be 500, 750 or 1000, with probabilities of 30%, 50% and 20% respectively. The company must pre-order the blank t-shirts (cost=$5 per shirt) and it can sell finished shirts for $12 apiece. Any finished shirts that cannot be sold at the event can be sold for $2 apiece to a used clothing vendor. -Refer to Exhibit 2-1. Suppose that blank t-shirts can only be ordered from the wholesale vendor in batches of 100? How many t-shirts should the company order?

Exhibit 2-1A t-shirt company is planning a production run for an event where the attendance (and thus demand for t-shirts) is uncertain. The event planners have indicated that they think the attendance will be 500, 750 or 1000, with probabilities of 30%, 50% and 20% respectively. The company must pre-order the blank t-shirts (cost=$5 per shirt) and it can sell finished shirts for $12 apiece. Any finished shirts that cannot be sold at the event can be sold for $2 apiece to a used clothing vendor. -Refer to Exhibit 2-1. What are the two possible cases for the amount of t-shirts that will be sold to the used clothing vendor? How would you calculate this amount in a spreadsheet model?

Which of the following is not one of the types of curve fitting models available in Excel's Trendline tool?

Estimating the relationships between variables in a spreadsheet model can be done using:

Exhibit 2-2 A small sporting goods company is considering investing $2000 in a project at the start of year 1 that will produce volleyballs over the next five years. The company plans to produce and sell 200 volleyballs in the first year, and expects that volume to grow by 10% each year thereafter. The unit selling price forecast the company has developed is $20 in year 1, $22 in year 2, $25 in year 3, $28 in year 4, and $31.50 in year 5. Variable costs are forecast to be $15 per unit produced, and there will be a fixed overhead cost in each year of $500. (Unless otherwise indicated, assume that all cash flows occur at the end of the year.) -Refer to Exhibit 2-2. Suppose the company thinks it may be able to produce and sell more than currently planned. What growth rate of production would produce an NPV of $10,000?

Exhibit 2-1A t-shirt company is planning a production run for an event where the attendance (and thus demand for t-shirts) is uncertain. The event planners have indicated that they think the attendance will be 500, 750 or 1000, with probabilities of 30%, 50% and 20% respectively. The company must pre-order the blank t-shirts (cost=$5 per shirt) and it can sell finished shirts for $12 apiece. Any finished shirts that cannot be sold at the event can be sold for $2 apiece to a used clothing vendor. -Refer to Exhibit 2-1. What Excel function is useful for calculating revenue? Explain why it is useful.