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| Teaching Since: | Apr 2017 |
| Last Sign in: | 419 Weeks Ago |
| Questions Answered: | 3232 |
| Tutorials Posted: | 3232 |
MBA,MCS,M.phil
Devry University
Jan-2008 - Jan-2011
MBA,MCS,M.Phil
Devry University
Feb-2000 - Jan-2004
Regional Manager
Abercrombie & Fitch.
Mar-2005 - Nov-2010
Regional Manager
Abercrombie & Fitch.
Jan-2005 - Jan-2008
1. Suppose Francine Dunkelberg’s Sweets is considering investing in warehouse-management software that costs $550,000, has $75,000 residual value, and should lead to cost savings of $130,000 per year for its five-year life. In calculating the ROR, which of the following figures should be used as the equation’s denominator (average amount invested in the asset)?
a. $275,000
b. $237,500
c. $625,000
d. $312,500
2. Your rich aunt has promised to give you $2,000 a year at the end of each of the next four years to help you pay for college. Using a discount rate of 12%, the present value of the gift can be stated as
a. PV = $2,000 (PV factor, i = 4%, n = 12).
b. PV = $2,000 (Annuity PV factor, i = 12%, n = 4).
c. PV = $2,000 (Annuity FV factor, i = 12%, n = 4).
d. PV = $2,000 * 12% * 4.
3. Which of the following affects the present value of an investment?
a. The type of investment (annuity versus single lump sum)
b. The number of time periods (length of the investment)
c. The interest rate
d. All of the above
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