ORIE 3150 practice prelim II

ORIE 3150 practice prelim II - ORIE 3150 Name (please...

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ORIE 3150 Name (please print)_____________________________________ Practice Prelim Two Fall 2009 1. Time Value of Money c i i nom = ( 29 n i 1 PV FV + = single payment - + = i 1 ) i 1 ( A FV n annuity + - = - i ) i 1 ( 1 A PV n annuity ______________________________________________________________ 2. Bonds ( 29 ( 29 n n i 1 FV i i 1 1 A PV + + + - = - The “bond equation” The annual yield for a bond is 2 × i for bonds that pay interest semi-annually. Interest Expense = i × Carrying Value Carrying value must be updated every 6 months when interest is paid. ______________________________________________________________ 3. Leases - The Lease Checklist: 1. The lease transfers ownership to the lessee at the end of the lease term. 2. The lease contains a bargain purchase option 3. The lease term is equal to 75% or more of the estimated economic life of the asset 4. The present value of the lease payments amounts to 90% or more of the fair value of the lease property. If any one is true, it is a capital lease! If none are true, it is an operating lease. For #1 or #2 is true, depreciate over the useful life. Otherwise, depreciate over the lease term. ______________________________________________________________ 5. Cash Flow ΔC = ΔL + ΔOE – ΔNCA Cash Collected from Customers = Net Sales – ΔA/R Cash Paid for Purchases = CGS + ΔInventory – ΔA/P
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Cash Payments for Interest = Bond Interest Expense + Amortization of Bond Premium Cash Payments for Interest = Bond Interest – Amortization of Bond Discount Cash Payments for Salaries = Salaries Expense – ΔSalaries Payable ______________________________________________________________ 6. Earnings Per Share EPS = Net Income Average Number of Shares Outstanding _______________________________________________________________________ 7. Inventory Impairment Net realizable value (NRV) – equals the estimated selling price in the ordinary course of business less costs of repair, preparation and disposal Net adjusted cost (NAC) – equals the NRV less a normal profit margin (NPM). NAC = NRV – NPM
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This note was uploaded on 10/07/2010 for the course ORIE 3150 taught by Professor Callister during the Fall '08 term at Cornell.

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ORIE 3150 practice prelim II - ORIE 3150 Name (please...

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