Answer the following statements true (T) or false (F)
1) Compound interest assumes that all interest earned will remain invested and earn additional interest at the same interest rate.
2) The only difference between the present value and future value of a lump sum is the amount of interest that is earned in the intervening time span.
3) The following formula is used to compute the present value of a lump sum:
Future value = Present value × PV factor for i = X%, n = X periods
4) The process for calculating present values is often called discounting future cash flows because future amounts are discounted to their present value.
5) An annuity is a series of unequal payments over equal intervals.
1) TRUE
2) TRUE
3) FALSE
Explanation: Present value = Future value × PV factor for i = X%, n =X
4) TRUE
5) FALSE
Explanation: An annuity is a series of equal payments over equal intervals.
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Issues management is NOT part of strategic planning and management when it
A. Builds coalitions with other parties interested in an issue B. Adjusts the organization to improve relationships with stakeholders C. Uses only persuasive communication to influence public policy D. Accelerates issues of opportunity E. Eliminates or redirects potential threats
Simpson, Inc. is considering a five-year project that has an initial outlay or cost of $80,000
The respective future cash inflows from its project for years 1, 2, 3, 4 and 5 are: $15,000, $25,000, $35,000, $45,000, and $55,000. Simpson uses the internal rate of return method to evaluate projects. What is the project's IRR? A) The IRR is less than 22.50%. B) The IRR is about 24.16%. C) The IRR is about 26.16%. D) The IRR is over 26.50%.
Heinz has announced that they plan to grow the company through an accelerated push into emerging markets such as China, Indonesia, and India in the next ten years. This is an example of:
A. tactical objectifying B. contingency plan C. strategic planning D. marketing implementation E. horizon planning
Balser Corporation manufactures and sells a number of products, including a product called JYMP. Results for last year for the manufacture and sale of JYMPs are as follows: Sales $960,000 Less expenses: Variable production costs$464,000 Sales commissions 144,000 Salary of product manager 100,000 Fixed product advertising 160,000 Fixed manufacturing overhead 132,000 1,000,000 Net operating loss $ (40,000)?Balser is trying to decide whether to discontinue the manufacture and sale of JYMPs. All expenses other than fixed manufacturing overhead are avoidable if the product is dropped. None of the fixed manufacturing overhead is avoidable.Assume that dropping Product JYMP will have no effect on other products. The annual
financial advantage (disadvantage) for the company of eliminating this product should be: A. ($132,000) B. ($172,000) C. $40,000 D. ($92,000)