Busn 278 Midterm exam (1)
1. (TCO 1) It is important that budgets be accepted by _____.
2. (TCO 2) The quantitative forecasting method that uses actual sales from recent time periods to predict future sales assuming that the closest time period is a more accurate predictor of future sales is the _____.
3. (TCO 3) Before performing linear regression, it is important to ensure that a linear relationship exists between the dependent and independent variables by plotting observed data on a diagram called the _____.
4. (TCO 4) Marketing costs include ___
5. (TCO 5) Which of the following is not true when ranking proposals using zero-base budgeting?
6. (TCO 6) The payback period is computed by dividing the cost of the capital investment by the _____.
7. (TCO 1) Budgeting can be an important management tool if implemented properly. Identify several positive results when budgets are used properly. Identify several negative results if budgets are not properly implemented
8. (TCO 2) Budgeting and forecasting are both vital to a company’s success. Compare and contrast these two elements.
9. (TCO 2) The Federal Election Commission maintains data showing the voting age population, the number of registered voters, and the turnout for federal elections. The following table shows the national voter turnout as a percentage of the voting age population from 1972 to 1996 (The Wall Street Journal Almanac, 1998).
10. (TCO 3) Use the table “Food and Beverage Sales for Paul’s Pizzeria” to answer the questions below.
11. (TCO 6) Jackson Company is considering two capital investment proposals. Estimates regarding each project are provided below.
| Project Nuts | Project Bolts | |
| Initial Investment | $175,000 | $100,000 |
| Annual Net Income | $30,000 | 52,000 |
| Annual Cash Inflow | $70,000 | $45,000 |
| Salvage Value | $0 | $0 |
| Estimated Useful Life | 3 years | 3 years |
The company requires a 9% rate of return on all new investments.
Part (a): Calculate the payback period for each project.
Part (b): Calculate the net present value for each project
12. (TCO 6) Top Growth Farms, a farming cooperative, is considering purchasing a tractor for $468,000. The machine has a 10-year life and an estimated salvage value of $32,000. Top Growth uses straight-line depreciation. Top Growth estimates that the annual cash flow will be $78,000. The required rate of return is 9%.
Part (a): Calculate the payback period.
Part (b): Calculate the net present value.
Part (c): Calculate the accounting rate of return