Tman 540 Midterm Exam

TMAN 625 Midterm Exam, Spring 2012

Name

Question 1 2 3 4 5 6 7 8 9 10 Late Total

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Week 1 2 2 3 3 3 4 4 5 5

TVOM‐qualitative Annual Annuity Annual Loan Loan Annuity stocks verses bonds Discounted Payback PW, FW, AW IRR independent ‐ cost only IRR mutually exclisive

TMAN625 Midterm Exam, Summer 2012

Name

Eric D. Choi

Question 1 2 3 4 5 6 7 8 9 10 Late Total

Score 0 0 0 0 0 0 0 0 0 0 0 0

Question 1

Score

0

Explain where or when each of the following should be used. Use not more than 100 words for each, which is about what the allotted space below holds. This can be answered below or in a MS Word formatted document. a Effective Annual Rate Used when compounding is not annual
off completely. If they can afford

Question 5

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Rebecca and Salvador have a grand plan. They will deposit their combined annual bonuses and other sav annually (annual deposits) for the upcoming ten years and then take a year off from their jobs and live it 11 spending $8,000 monthly (end of month). They also will withdraw a total of $15,000 at the end of yea up an apartment, and to live on for the first month. The last months payment will pay for getting home, friend and relatives, etc. The annuity in which they will invest pays an annual percentage rate of 4.75% c and this rate is applicable to both the deposit and withdrawal phases of their plan How much will they have at the end of the Paris diversion? Annual Deposit 0 1 2 3 4 5 6 7 8 9 10 11 Withdraw Balance

$10,000 $10,485.48 $10,000 $21,480.01 $10,000 $33,008.29 $10,000 $45,096.25 $10,000 $57,771.06 $10,000 $71,061.20 $10,000 $84,996.55 $10,000 $99,608.43 $10,000 $114,929.69 $10,000 ($15,000.00) $115,266.54 ($8,000.00)
One is to automate the p process with a new machine, a second is to outsource the production , and the third is to perform a multi enhancement of the present process. The net earnings of this product in year 1 for all three alternatives is forecast at $500,000. The net earning automated alternative are expected to increase 15% annually in years 2‐10 due to increased quality. The for the outsourced alternative are expected to increase by 10% annual in years 2‐10 due to reduced cost. earning for the "Enhance" alternative are expected to arithmetically grow $60,000 annually in years 2‐10 d combination of continuous improvements in cost and quality. The investments and forecasted net earnings for each are shown below. Since the timing of the investme vary greatly over the 10 year time horizon, the CEO has specified that the annual worth criterion using a M be used to choose the best solution from a financial perspective. (She and her staff will consider other no criteria). Provide a financial analysis and recommended solution for the CEO. Investment Costs Automate Outsource Enhance MARR Automate Net earnings Investment Costs Cash Flow Outsource Net earnings Investment Costs Cash Flow Enhance Net earnings Investment Costs Cash Flow Present Worth Automate Outsource Enhance Annualized Worth Automate Outsource Enhance 0 $900,000 $250,000 $0 14% 0 ($900,000) ($900,000) 0 ($250,000) ($250,000)