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ME353 Engineering Finance
key
First Midterm Exam
Closed Book
1. (12 Points)
a.
In a certain year a company makes a profit. This is called the net income for the year. The company may also pay
dividends to the stockholders during the same year. For financial purposes we compute the difference between net income
and dividends. What is this value called?
Retained earnings
b.
The principal output of one of the financial reports is sometimes called the bottom line. The bottom line of this report
becomes the top line of another financial report. What is the financial report where the bottom line is calculated?
Income Statement
c.
A project has three workpackages. The mean and standard deviation for the costs of the three WP’s are:
μ
1
= 100,
σ
1
= 10,
2
= 150,
2
= 1
5, and
3
= 200,
σ3
=
20. The workpackage costs are independent. What are the mean and
standard deviation
of the project cost?
Mean is the sum of the means: 450
Variance is the sum of the variances: 725
Standard deviation is the square root of variance: 26.93
d.
The standard labor hours of 9 per unit of some product is based on a time study of the 4th unit produced. Based on
Z(4)= 9
x= 2
K=9/(.9^2)= 11.1111111
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 Spring '10
 BARD

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