Exam 22: Financial Analysis

Which method of analysis does not consider the time value of money?

Cash flows should be converted to ________ amounts before applying the net present value,payback,or internal rate of return method to them.

Jake buys a new work truck every four years regardless of the condition of his current vehicle.His next truck will cost $45,000 and Jake estimates it will have a salvage value of $20,000 when it's time to buy a replacement.What is the annual depreciation?

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?

Discounting is the process by which interest on an investment accumulates,and then earns interest itself for the remainder of the investment period.

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

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 10%,what is the present value of this investment?

The interest rate is also called the discount rate.

Describe the basic techniques of financial analysis.

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

The amount that must be invested now to accumulate to a certain amount in the future at a specified interest rate is called the ________.

The ________ is the discount rate that makes the NPV of a project zero.

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

What is payback from the financial perspective? Why would a manager choose to use this approach to investment analysis?

A(n)annuity is composed of a series of ________ payments.

Depreciation is not a legitimate cash flow.

The value of an investment at the end of the period over which interest is compounded is called the:

Straight-line depreciation is an accelerated depreciation method.

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 $1000 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.

An investor puts $10,000 in an account earning 4 percent compounded interest.At the end of three years,the account will have a value of: