FIN 470 Exam 1
What are the three types of financial management decisions? For each type of decision, give an example
of a business transaction that would be relevant.
Capital budgeting (deciding whether to expand a manufacturing plant), capital
Exam 2 Finance 470
1. When is EAC analysis appropriate for comparing two or more projects? Why is this
method used? Are there any implicit assumptions required by this method that you find
The EAC approach is appropriate when comparing
1. Suppose you own stock in a company. The current price per share is $25. Another company has just
announced that it wants to buy your company and will pay $35 per share to acquire all the outstanding
stock. Your companys managem
End of Chapter Answers
1. Using the rule of 72, approximate the following amounts. (Obj. 1)
a. If the value of land in an area is increasing 6 percent a year, how long will it take for property
values to double?
About 12 years (72 / 6)
b. If you
ANSWERS TO "DO YOU UNDERSTAND?" TEXT QUESTIONS
DO YOU UNDERSTAND?
1. What is likely to happen to the monetary base if (a) the Treasury department sends out Social Security
checks payable from its account at the Fed, (b) the Fed buys more governm