Monday, July 29, 2013

A client wants to know how many years it would take before..

the accumulated cash flows from an investment exceed the initial investment, without taking the time value  of money into account. Which of the following financial models should be used?

  • Net present value
  • Time value of money
  • Payback period
  • Internal rate of return


Answer: Payback Period

The requirement is to identify the term that describes a method that measures the number of years it takes to recoup an initial investment without considering the time value of money. This answer is correct because the definition describes the payback period.

Under Frost free conditions

The requirement is to determine what the probability of frost must be for Ball to be indifferent to spending $20,000 for frost protection.  In other words, you must find the point at which the cost of the frost protection equals the expected value of the loss from frost damage.  The table below summarizes the possible outcomes.

 FrostFrost-free
Protected
$180,000
Market value
$1200,000
Market value
Unprotected$80,000
Market value
$120,000
Market value


The difference between the market value of protected and unprotected strawberries if a frost were to occur is $100,000.  Since we want to determine the probability of a frost when the expected value of the loss from frost damage is $20,000, this probability can be calculated as follows:

Loss from
damage
×Probability
of frost
=Expected value
of the loss
$100,000×P=
$20,000
  $20,000
  P=$100,000
  P=          .200

Thursday, July 11, 2013

What is process reengineering?

Process Reengineering is a critical evaluation and major resign of existing processes to achieve breakthrough improvements in performance.


Wednesday, June 19, 2013

An overall description of a database

...Including the names of data elements, their characteristics, and their relationship to one another, would be defined by using a:

Answer: Data Definition Language (DDL) 

Used to define a database, including creating, altering, and deleting tables and establishing various constraints.



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Saturday, June 1, 2013

Which of the following techniques...


Question: Which of the following techniques consistently gives the best answer when evaluating investment projects that are mutually exclusive?
  • The payback method
  • The internal rate of return
  • Net present value
  • The accounting rate of return


Answer: Net Present Value

The net present value consistently provides the best solutions even when considering mutually exclusive projects.
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Keller Company has implemented...

Question: Keller Company has implemented an enterprise risk management system and has responded to a particular risk by adding internal controls. Such a response is characterized by COSO's Enterprise Risk Management Framework as:


  • Acceptance
  • Avoidance
  • Reduction
  • Sharing


Answer: Reduction
Reduction involves reducing the likelihood or impact by implementing controls or managing the risk.







Question: Which of the following committees of the board...


  • Which of the following committees of the board of directors generally has the responsibility of overseeing CEO succession?


Answer: The nominating/corporate governance committee

  • The nominating/corporate governance committee is responsible for overseeing CEO succession.