Data Corp is considering which of 4 different projects to undertake in order to maximize its net present value (NPV). Define Xi as a binary variable that equals 1 if project i is undertaken and 0 otherwise, for
i = 1, 2, 3, 4.
The NPV and required capital (in millions) for each project are listed below.
Project Net Present Value Capital Required
1 40 9
2 80 13
3 10 3
4 90 8
Which of the following represents the constraint stating that project 3 can be undertaken only if project 2 is undertaken?
A) X2 + X3 ? 1
B) X2 - X3 ? 0
C) X3 - X2 ? 0
D) X2 - X3 ? 1
E) X3 - X2 ? 1
C
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Firms' choices and estimates within U.S. GAAP or IFRS should be determined by all of the following except:
a. firms' underlying economic circumstances. b. conditions in the company's industry. c. the company's competitive strategy. d. accelerated management efforts to meet earnings projections.
The payback period method, unlike the net present value method, does not ignore cash flows after the point of cost recovery.
Answer the following statement true (T) or false (F)
The setup cost to make carpets is $20 per setup. The holding cost is $1.75 per yard per year, and the annual demand is 12,000 yards of carpet per year. The manufacturing facility operates 300 days, and 120 yards of the carpet are produced per day. In this example, ______.
a. the daily demand rate is 12,000/365 b. the daily demand rate is 12,000/300 c. the daily production rate is 12,000/300 d. the daily production rate is 12,000/300
Performance indexes
A. provide a qualitative measure of what "ought to happen." B. are based on the iceberg principle. C. are used mainly to eliminate lazy salespeople. D. are calculated from the Consumer Price Index. E. show the relation of one value to another.