2005 Quiz 1
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Dalhousie University *
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2005
Subject
Industrial Engineering
Date
Dec 6, 2023
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8
Uploaded by MagistrateAntelopeMaster1110
2005 Quiz 1 Section 1 (3 questions) 1.
In a cash flow diagram, when are cash flows assumed to occur? (page 31) a)
At the beginning of each period b)
Between each period c)
At the end of each period d)
Either A or B, depending on the details of the problem 2.
What is an opportunity cost? (page 20) a)
The cost of engaging in an opportunity b)
The cost of a resource that provides profit c)
The lowest cost of a resource d)
The benefit that is lost when a resource is engaged in another activity 3.
Which of the following is generally assumed in life-cycle costing? (page 22) a)
That the later a design change is made, the higher the cost b)
That costs are highly variable throughout the life of a project c)
That salvage values provide significant returns at the end of a project's life d)
That life-cycle costs are only useful once a product has been produced 4.
What is "overhead"? (page 7) a)
The indirect costs of running a company that cannot be tied to any particular task that the company executes. b)
The cost of electricity. c)
The costs of constructing the rooves and ceilings for various buildings required for company operations. d)
Indirect costs associated with hiring (benefits, retirement, etc.) 5.
What is a feasible solution to a particular problem that is often ignored? (Page 10) a)
The "do-nothing" option b)
The "do-everything" option c)
The "win-at-all-costs" option d)
The "sacrifice-the-environment" option 6.
What is Engineers Canada? (Page 10) a)
The federation of the provincial and territorial Professional Engineering associations. b)
The governing body of the provincial and territorial Professional Engineering associations. c)
Subject to the demands of the provincial and territorial Professional Engineering associations. d)
The entity that controls how each provincial and territorial Professional Engineering association runs its day-to-day operations. 7.
What is the difficulty in making ethical decisions? (page 14(
a)
Sometimes who pays the cost and who gets the benefit of a decision are different entities/groups of people. b)
It is hard to determine how to choose between safety and cost. c)
Different cultures have different expectations around ethical behaviour. d)
All of the above e)
Chapter 2 (2 questions) 1.
What do liabilities equal? (Page 53) a)
Assets minus equity b)
Equity plus assets c)
Taxable income minus assets d)
None of the above 2.
What is the balance sheet? (Page 53) a)
It gives an overview of a company's financial state at a given point in time. b)
It can typically be disregarded. c)
It is only relevant for accountants. d)
It describes how much money a company made over a given period. 3.
What are assets? Page 53 a)
Anything that has monetary value and is owned by the firm. b)
Only those things that can be quickly converted to cash (i.e. highly liquid). c)
Only physical things such as buildings, equipment, etc. d)
Anything that the firm has access to and uses in their operations whether owned, leased, or rented etc. 4.
What is the purpose of the income statement? Page 55 a)
To determine if there was a profit or a loss over a given period of time. b)
To determine what the value of a firm's current assets is. c)
To determine what the company should be sold for. d)
To determine if a company has enough cash to continue operations in the future. Chapter 3 Sec 1 (2 Questions) 1.
What is the idea behind finding economic equivalence? a)
To find the value of a cash-flow series at a particular point in time. b)
To always find the present worth of a cash-flow series. c)
To always find the future worth of a cash-flow series. d)
To always find the annual equivalent value of a cash-flow series.
2.
What is the formula for a future value (F) of a present sum (P) at an interest rate (i) for a number (n) of periods? a)
P = F(1 + i)n b)
F = P(1 + in) c)
F = P(1 + i)
n
d)
F = P(1 + n)
i
3.
What is the single payment present worth notation? a)
P = F(1 + i)
n
b)
F = P(1 + i)
n
c)
P = F(F/P, i, n) d)
P = F(P/F, i, n) 4.
In the formula, P = F(1 + i)-n, the factor (1 + i)-n is called what? a)
The capital recovery factor b)
The single payment present worth factor c)
The uniform series present worth factor d)
The single payment compound amount factor 5.
Which term refers to interest that is charged on unpaid interest? a)
Comparable equivalent value b)
Continuous compounding c)
Simple interest d)
Compound interest 6.
Given various options of cash flow series' to choose from, what method do we use to choose the "best" option? a)
The technique of economic equivalence. b)
The balance sheet method. c)
The income statement method. d)
The future worth method. 7.
You have computed the present worth (PW) of a lengthy cash flow series. You now want to calculate the future worth (FW) of the same series. a)
One can simply find the FW of the already found PW value. b)
One must calculate FW by going back to the original cash flow values. c)
Once the PW is calculated the FW cannot be calculated. d)
One does not have to calculate anything since FW is always equal to PW. Section 2 (3 questions)
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8.
$500 today at a 5% per year compounded interest rate is worth what in 3 years? Round to nearest dollar amount, do not include $ symbol (pp. 70-71) FV= 500(F/P, 5%, 3)= 500*1.1576= $579 9.
$500 today at a 6% per year compounded interest rate is worth what in 3 years? Round to nearest dollar amount, do not include $ symbol FV= 500(F/P, 6%, 3)= 500*1.1910= $596 10.
$500 today at a 4% per year compounded interest rate is worth what in 3 years? Round to nearest dollar amount, do not include $ symbol FV= 500(F/P, 4%, 3)= 500*1.1249= $562 11.
What is the future worth of $1000 deposited at time "0" at an interest rate of 5% compounded quarterly for 5 years? Round to nearest dollar amount, do not include $ symbol i= 5/4=1.25% FV=1000(P/F, 5/4, 5*4)=1000*(1.0125)^20 = $1282 Partial FV=1000(P/F, 0.05, 5*4)=1000*(1.05)^20 = $2653 12.
What is the future worth of $2000 deposited at time "0" at an interest rate of 5% compounded quarterly for 8 years? Round to nearest dollar amount, do not include $ symbol i= 5/4=1.25% FV=2000(P/F, 5/4, 8*4)=2000*(1.0125)^32 = $2976 Partial FV=2000(P/F, 0.05, 8*4)=2000*(1.05)^32 =9530 ------------------------------------------------------------------------------------------------- 13.
What is the present worth so that at the end of 8 years you will have $1000 deposited if the interest rate of 5% compounded quarterly? Round to nearest dollar amount, do not include $ symbol i= 5/4=1.25% PV= 1000(P/F, 5/4, 8*4)= 1000/(1.0125)^32=672 Partial FV=2000(P/F, 0.05, 8*4)=1000/(1.05)^32 =210 14.
What is the present worth so that at the end of 5 years you will have $2000 deposited if the interest rate of 5% compounded quarterly? Round to nearest dollar amount, do not include $ symbol i= 5/4=1.25% PV= 2000(P/F, 5/4, 5*4)= 2000/(1.0125)^20=1560 Partial PV= 2000(P/F, 5, 5*4)= 2000/(1.05)^20=754
15.
Klaus wishes to deposit an amount of money now so that at the end of five years $500 will have been accumulated. With interest at 4% per year, compounded semi-annually, how much should he deposit now? Round to nearest dollar amount, do not include $ symbol PV= 500(P/F, 4/2, 5*2)= 500*0.82035= 410 Partial PV= 500(P/F, 4, 5*2)= 500*0.67556=338 16.
Klaus wishes to deposit an amount of money now so that at the end of five years $1000 will have been accumulated. With interest at 4% per year, compounded semi-annually, how much should he deposit now? Round to nearest dollar amount, do not include $ symbol PV= 500(P/F, 4/2, 5*2)= 1000*0.82035= 820 Partial PV= 500(P/F, 4, 5*2)= 1000*0.67556= 676 ------------------------------------------------------------------------------------------------- 17.
You are a server throughout school to help pay for things but try to save up a portion of your tips for your Iron Ring Blowout Party. If interest is compounded yearly at 3%, how much do you have for that party (ie solve for x in year 5)? Round to nearest dollar amount, do not include $ symbol Year1=250, year2=100, year3= 500, yr4=285, yr5= 400 FV=x=250*1.03^4+100*1.03^3+ 500*1.03^2 +285*1.03^1 + 400= $1615 18.
You are a server throughout school to help pay for things but try to save up a portion of your tips for your Iron Ring Blowout Party. If interest is compounded yearly at 2%, how much do you have for that party (ie solve for x in year 6)? Round to nearest dollar amount, do not include $ symbol Year1=250, year2=100, year3= 400, yr4=295, yr5= 350
FV=x=250*1.02^5+100*1.02^4+400*1.02^3+295*1.02^2+350*1.02^1=$1473
19.
You are a server throughout school to help pay for things but try to save up a portion of your tips for your Iron Ring Blowout Party. If interest is compounded yearly at 2%, how much do you have for that party (ie solve for x in year 6)? Round to nearest dollar amount, do not include $ symbol Year1=325, year2=85, year3= 650, yr4=420, yr5= -350 FV=x=325*1.02^5+85*1.02^4+650*1.02^3+420*1.02^2-350*1.02^1=1221
20.
You make a terrible mistake and borrow money from your older sister. She says you can pay her back over the next 5 years, but she will charge 2% interest compounded yearly. How much did you initially borrow (ie solve for x) if the following diagram shows how you repaid her? Round to nearest dollar amount, do not include $ symbol Year1=325, year2=85, year3= 650, yr4=420, yr5= -350
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PV=x=325/1.02^1+85/1.02^2+650/1.02^3+420/1.02^4-350/1.02^5=1084
21.
You make a terrible mistake and borrow money from your older sister. She says you can pay her back over the next 5 years, but she will charge 3% interest compounded yearly. How much did you initially borrow (ie solve for x) if the following diagram shows how you repaid her? Round to nearest dollar amount, do not include $ symbol Year1=250, year2=100, year3= 400, yr4=295, yr5= 350 X=PV= 250/1.03^1+100/1.03^2+400/1.03^3+295/1.03^4+350/1.03^5=1267
You make a terrible mistake and borrow money from your older sister. She says you can pay her back over the next 5 years, but she will charge 2% interest compounded yearly. How much did you initially borrow (ie solve for x) if the following diagram shows how you repaid her? Round to nearest dollar amount, do not include $ symbol Year1=250, year2=100, year3= 400, yr4=285, yr5= 350
22.
Year1=250, year2=100, year3= 400, yr4=285, yr5= 350 PV=x=250/1.02^1+100/1.02^2+400/1.02^3+285/1.02^4+350/1.02^5=1298