Lecture 8 - Net present Value & Other Analysis of
Investment Options
Chapter 8
Key Concepts and Skills
Understand:
The payback rule and its shortcomings
Accounting rates of return and their problems
The internal rate of return and its strengths and
we
Are you here today?
1. Yes
2. No
7-1
Topic Equity Markets and
Stock Valuation
Chapter 7
What are some possible ways
that firms can finance projects?
Loan or debt.
Debt financing- loans
Investors= stock holders or
equity financing- stocks and shares
Two ty
Topic 6: Interest Rate and Bond
Valuation 4/6/17
Chapter 6
Key Concepts and Skills
Know the important bond features and
bond types
Understand:
Bond values and why they fluctuate
Bond ratings and what they mean
The impact of inflation on interest rate
4-1
Key Concepts and Skills
Be able to compute:
The future value of an investment made today
The present value of cash to be received at some future
date
The return on an investment
The number of periods that equates a present value
and a future valu
Test 10
BUS-365
SP2017
20 points
NAME_
The table to the right and the graph below gives the average
number of pitchers used per game in major league baseball for the
seasons from 2004 through last season. The average number of
pitchers used per game over
Test 5
BUS-365
FA2017
20 points
Questions 1-6 refer to the following:
Jacob rolls a die three times and plots
the results. The first roll is a 1, the
second roll is a 3 and the third roll is a
5. The y-value is the number on the
die and the x-value is the
Test 9
NAME_
BUS-365
SP2017
20 points (blanks 1-6 are three points each, blank 7 is two points)
Consider the following six data points that relate the cost for a
gallon of gasoline to the month over a six-month period. They are
plotted in the accompanying
Test 21
BUS-365 SP2017
20 points
NAME_
In the penny-nickel game, each player puts out either a nickel or a penny. One player wins
the other's coin if they are the same and the other wins if the coins are different. Sam is
playing against Dave. Sam wins if
Test 12
BUS-365
SP2017
20 points
NAME_
Imagine a stock that has a value of $100 on January 1st. On the 15th of each month a fair coin is
tossed and the value of the stock is increased by $1 if the coin is heads and the value of the stock is
decreased by $
Test 11
BUS-365
SP2017
20 points
NAME_
1. When Nancy called Clement this morning, his Golden Retriever was just having puppies.
Clement told her that two male puppies had been born so far. Nancy was very excited. Nancy
rushed over to see the puppies, and
Test 20
BUS-365 SP2017
20 points
NAME_
Two hospitals are provided federal grants to determine which treatment is better for a
particular disease. Hospital X reports that treatment A cured 20% of its cases (40 out of
200) and treatment B cures 15% of its c
Test 16
BUS-365 SP2017
20 points
NAME_
Davisson Manufacturing Company purchases two component parts from three different suppliers;
Alpha, Bravo and Charlie. The suppliers have limited inventories of these parts, and no one supplier
can provide Davisson w
P = $5000 W + $3000 B
Test 15
BUS-365
SP2017
20 points
NAME_
A farmer can plant up to 8 acres of land with wheat and barley. He can earn $5,000
for every acre he plants with wheat and $3,000 for every acre he plants with barley.
His use of a necessary pes
Test 14
BUS-365
SP2017 20 points
NAME_
You and a friend are going to the Cavs game tonight. Your friend like to make the game more
interesting by making a wager on Lebrons performance. Tonight, he wants you to give him
$10 for for every shot Lebron blocks
Test 19
BUS-365 SP2017
20 points
NAME_
On the previous test we explored the TWR for a fixed-fraction, even-money investment
involving two wins and one loss. The equation for the TWR is:
2
TWR=( 1+ F ) (1F )
TWR vs F for 2 Wins and 1 Loss
1.4
1.2
1
0.8
Ter
QUIZ 4
Name:
What are the differences between the income statements for a manufacturing and for a
merchandising company?
Use the correct number to designate each item below. Assume a manufacturer.
1.
2.
3.
4.
direct materials
selling and general expenses
2-1
Key Concepts and Skills
Know:
The difference between book value and
market value
The difference between accounting income
and cash flow
The difference between average and
marginal tax rates
How to determine a firms cash flow from
its financial sta
KEY
Test 3
NAME_
BUS-365
SP2017
20 points Fill in the Blank (feel free to use scratch paper if necessary)
1. A gumball machine has 9 red
gumballs, 7 blue gumballs and 5 white
gumballs. A mother of twins would
like to buy them gumballs of the same
color. W
KEY
Test 6
BUS-365
FA2017
20 points
NAME_
Consider the following fitness level data from two different subjects, Mr
Red and Mr Green, taken once a week after a clinical treatment. Each
set of data is fit to a straight line with the fit parameters given in
BUS-365 SP2017
Quiz 4
20 points
NAME_
The ten-digit "autobiographical" number is an integer between
1,000,000,000 and 9,999,999,999. It gives the number of times each digit
appears in itself in the order from 0, 9, 8, 7, 6, 5, 4, 3, 2, and 1. That is, the
Test 2
BUS-365
SP2017
20 points
NAME_
Questions 1-4 refer to the following data
table.
A mutual fund has the following yearly
results over three consecutive years.
Year
1990
1991
1992
Result
-24%
+60%
-24%
1. What is the growth factor of the fund for
the
BUS-365 SP201
Test 1
30 points
NAME_
1. The current standings in the Central Division
of the Eastern Conference of the NBA are
Team
Cleveland
Indiana
Milwaukee
Chicago
Detroit
Record
28-10
20-18
19-18
19-20
18-22
Pct.
73.7
52.6
51.4
48.7
45.0
Are these da
Test 7
BUS-365 (take home)
FA2017
20 points
NAME_
1. On test five, problems 1-6 involved the
following problem: Jacob rolls a die three
times and plots the results vs roll number.
The first roll is a 1, the second roll is a 3 and
the third roll is a 5. Th
Chapter 5 and 6 Review
Chapter 5
1. Assume that there are two thefts of checks at ABC Company. In the first case, an
employee steals an outgoing check that is drawn on ABCs account and that is payable to
D. Jones. The perpetrator forges the endorsement of
ACFE Assignment
1. What does the CFE acronym stand for?
a. Certified Fraud Examiner
2. Search for the criteria to apply for membership to the ACFE. List the requirements and
any fees for the different membership levels that must be paid with the applicati
Chapter 3 & 4 Review Questions
Chapter 3
1. What is cash larceny?
a. The intentional taking away of the employers cash, without consent, and
against will.
2. How do cash larceny schemes differ from fraudulent disbursements?
a. Cash larceny is the outright
Study Guide for Exam 1
Chapter 1
The different types of business organizations and know the pros and cons of each type
The functions of treasurer as against the controller
Distinguish between working capital, capital budgeting, capital structure managemen
Topic 8 Making Capital
Investment Decisions
Chapter 9
Key Concepts and Skills
Understand how to:
Determine the relevant cash flows
for a proposed investment
Analyze a projects projected cash
flows
Evaluate an estimated NPV
9-2
Relevant Cash Flows
Inc
Lecture 8 - Net present Value & Other Analysis of
Investment Options
Chapter 8
Key Concepts and Skills
Understand:
The payback rule and its shortcomings
Accounting rates of return and their problems
The internal rate of return and its strengths and
we