CHAPTER 9 CHARACTERIZING RISK AND RETURN
9-1 Investment Return FedEx Corp stock ended the previous year at $103.39 per share.
It paid a $0.35 per share dividend last year. It ended last year at $106.69. If you owned 300
shares of FedEx
NPV with Normal Cash Flows Compute the NPV for Project M and accept or reject the
project with the cash flows shown below if the appropriate cost of capital is eight percent.
5-1 Future Value Compute the future value in year 8 of a $2,000 deposit in year 1 and
another $1,500 deposit at the end of year 3 using a 10 percent interest rate.
Use equation 5-1:
FV8 = $2,000 (1 + 0.10)7 + $1,500 (1 + 0.10)5 = $3,897.43 + $2,415.77 = $
Format: multiple choice, essays, Use Cases and DFDs
Chapters covered: 5, 7, 8, and 9
Chapter 5: Process Modeling
What is a process model?
o A formal was of representing how a business process operates
What is a logical process?
o Describe processes withou
University of Pittsburgh
Department of Management
Format: multiple choice, true or false, essays
What are the phases of SDLC? What is the deliverable of each phase? What does each phase deal with?
Systems Request & Feasibility Analys
Methods for Evaluating
Review and Introduction
There is a separation:
Some people have ideas that will produce money in the future, but not
the money required now to carry out the idea
Others have money now, but not
11. The Cost of Capital
Ch 14 (9th edition), Ch 15 (8th edition)
Cost of capital
how much it costs the company to use capital received
the amount that investors want to be paid in order to
invest in the firm
Additional Issues and
Opportunity costs, side effects, sunk costs
Evaluating projects that reduce costs
Evaluating projects with different lives
EAC, equivalent annual cost
Also from Chapter 10
Always low prices, is the first thing you think of when you think about one
of the most successful companies around the world, Wal-Mart. For years
they stand as a well know company due to their everyday low prices and
variety of products. Their m
Present Value and Future Value
o Future value is the value at a given future date of an amount placed on deposit today
and earning interest at a specified rate
o PV is the inverse of compound interest
o Pam Valenti wishes to find the pr