MGMT310_lecture26 - Announcements Announcements FinalExam:Saturday,May8 Time:8:00 10:00am LastName:A O,gotoSTEW130 LastNameP Z,gotoRAWL1086

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nnouncements Announcements Today is the last day of class!! Final Exam: Saturday, May 8 Time: 8:00 – 10:00 am Last Name: A–O , go to STEW 130 Last Name P–Z , go to RAWL 1086 What to study: everything since midterm 2 (lecture 16 and on) You must take the final exam to pass the course. I will hold final office hours on XXX (XXX to XXX) I will post practice exam soon.
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Exam reminders (same as usual) You may only bring pen/pencil and a calculator (no sharing!!) Seating arrangement: every other seat Do not open exam until it’s officially started Please be easy on the grader. Round your interim work and final answers at least to the nearest three decimal places (remember: w/ compounding, rounding errors blow up!!). Show your work where applicable. Review syllabus for policy on academic dishonesty
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apital budgeting review Capital budgeting review 1. Project development and classification 2. Estimation of cash flows 3. Project risk assessment ake a decision to accept/reject based on the above! 4. Make a decision to accept/reject based on the above! Recall common criteria for decision making: t Pt Vl PV( h if l ) V( h tfl ) Net Present Value : PV(cash inflows) – PV(cash outflows) Internal Rate of Return : the rate of return at which NPV would equal zero Payback period (and discounted payback period) : time it takes to recover initial cost rofitability Index V(cash inflows) / PV(cash outflows) Profitability Index : PV(cash inflows) / PV(cash outflows)
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Invest in popcorn machine? You are running a concession stand at the mall, for which you pay a flat rental fee of $500 per year. You have an assistant whom you currently pay $400 per year. Your lease expires in three years (at t=3) and cannot be renewed. Currently, you are only selling candy ($2/bag) and coke ($1/can). You are thinking of buying a popcorn machine that costs $5,000. This cost ill be depreciated straight e to zero over the machine’s five ar life In will be depreciated straight line to zero over the machine s five year life. In order to start making popcorn, you need an additional $200 in NWC (starting at t=0). To sell popcorn, you will need to pay your assistant an ditional $100 per year, starting at t=1. hen you close your concession additional $100 per year, starting att1 . When you close your concession stand at time t=3, you expect to sell the popcorn machine for $2,500. Based on the advice of a popcorn consultant (to whom you just paid $150), you expect that popcorn sales will bring in $1,000 per year. Moreover, you expect that if you sell popcorn, you will sell 50 fewer bags of candy, but you will sell 200 more cans of coke.
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This note was uploaded on 01/21/2011 for the course MGMT 310 taught by Professor Matthewjamesbarcaskey during the Spring '08 term at Purdue University-West Lafayette.

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MGMT310_lecture26 - Announcements Announcements FinalExam:Saturday,May8 Time:8:00 10:00am LastName:A O,gotoSTEW130 LastNameP Z,gotoRAWL1086

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