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Questions
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A marketing strategy refers toA. the means by which a marketing goal is to be achieved, usually characterized by a specified target market and a marketing program to reach it.B. the tactical decisions made to implement the marketing program.C. a technique to quantify performance measures and growth targets of a firm's strategic business units (SBUs).D. a road map for the marketing activities of an organization for a specified future time period, such as one year or five years.E. the detailed day-to-day operational decisions.
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At the functional level, the marketing departmentA. solicits talent from all levels of the organization for strategic corporate planning sessions.B. promotes its goals to the organization's stakeholders.C. looks outward, in part by listening to customers.D. develops the corporate culture.E. defines the overall strategic direction of the organization.
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The key to all scheduling techniques is toA. avoid scheduling tasks that can be done concurrently.B. avoid tasks that must be done sequentially.C. make sure to allow a 20 percent delay factor to account for contingencies.D. assign responsibility for end results to the entire group rather than a single individual.E. distinguish tasks that must be done sequentially from those that can be done concurrently.
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At the functional level, the organization's strategic direction becomesA. much more manageable since its offerings have been finalized.B. the most specific and most focused in terms of implementing the company's goals.C. broader since for less complex firms, the corporate and functional levels may merge.D. more general to avoid the "not invented here syndrome" that could result in missed opportunities.E. the sole responsibility of the CEO.
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The functional level in an organization is whereA. groups of specialists actually create value for the organization.B. employees perform assigned tasks without actually having input into the decision making process.C. all financial outlays are made.D. all company hiring and firing occurs.E. the strategic planners in SBUs makes all decisions regarding which product benefits will be promoted during a promotional campaign.
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The strategic business unit levelA. works most directly with the organization's target customers.B. directs the overall strategy for the organization.C. is most likely to change substantially over time.D. provides more end-user analysis in order to design more customer-directed products.E. is the level at which managers set a more specific strategic direction for their businesses to exploit value-creating opportunities.
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In a typical manufacturing firm, the structure of its marketing department is typically organized from top to bottom as follows:A. CEO to CFO to Product Manager.B. CEO to CMO to Product Manager.C. Product Manager to Marketing Research Manager to Sales Manager to Promotion Manager.D. Industry Manager to Market Manager to Product Manager.E. Product Manager to CMO to Sales Manager.
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A strategic business unit (SBU) refers toA. a single product or service identification code used to identify items for strategic marketing planning purposes.B. a small number of people from different departments in an organization who are mutually accountable to accomplish a task or common set of performance goals.C. a strategic product that has a unique brand, size, or price.D. a privately owned franchise under the auspices of a larger group or organization bearing the same name.E. a subsidiary, division, or unit of an organization that markets a set of related offerings to a clearly defined group of customers.
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__________ have an increasingly important role in top management because of their ability to think strategically, bringing with them to the job multi-industry backgrounds, cross-functional management expertise, analytical skills, and intuitive marketing insights.A. Chief marketing officers (CMOs)B. Chief financial officers (CFOs)C. Chief executive officers (CEOs)D. Chief human resource officers (CHROs)E. Chief operating officers (COOs)
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The corporate level in an organization is whereA. the department heads direct overall strategy for the entire organization.B. groups of specialists actually create value for the organization.C. a small number of people from different departments are mutually accountable to accomplish a task or a common set of performance goals.D. a subsidiary, division, or unit of an organization markets a set of related offerings to a clearly defined group of customers.E. top management directs overall strategy for the entire organization.
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Introducing its Champion heart pacemaker at medical conventions across Asia to demonstrate its many beneficial features is an example of Medtronic'sA. market segmentation and targeting strategy.B. price strategy.C. place strategy.D. promotion strategy.E. product/service strategy.
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As the article specifies, networked media is ______.
A. changing sports culture, the ways that people relate to sports images, and how athletes are produced
B. altering the scientific culture, the ways that people relate to scientific news, how research is produced, and how science is practiced
C. changing celebrity culture, the ways that people relate to celebrity images, how celebrities are produced, and how celebrity is practiced
D. causing people to become reliant on network news for their information and ideas
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11) The internal rate of return (IRR) is the rate of return, based on discounted cash flows, that a company can expect to earn by investing in a capital asset.
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When calculating the net present value of future cash streams, dollars that are received sooner are worth more than dollars received later.
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Which of the following describes the term time value of money?A) Money can only be used at certain times and for certain purposes.B) Money loses its purchasing power over time through inflation.C) Wasted time can result in wasted money.D) When money is invested over time, it earns income and grows.
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Which of the following best describes the internal rate of return?A) The discount rate that makes the cost of the investment equal to the present value of the cash flowsB) The discount rate that is used to borrow funds from a lenderC) The ratio of average annual income to average amount investedD) The rate at which an investment pays back
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Which of the following is the rate of return, based on discounted cash flows, that a company can expect to earn by investing in a capital asset?A) Rate of returnB) Net present value (NPV)C) Internal rate of return (IRR)D) Payback period
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Which of the following best describes the term opportunity cost?A) The cost incurred to qualify for an investment opportunityB) The benefit that is given up when choosing one out of a series of optionsC) The benefits of an investment which has come available suddenlyD) The opportunity to invest in certain cash flows and returns
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Which of the following best describes the profitability index?A) An index of projects in order of which has the most net incomeB) The ratio of present value of cash flows to initial investmentC) The ratio of total cash flows to initial investmentD) An array of possible investment outcomes at different discount rates
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Under conditions of limited resources, when a company is comparing several investments with the different amounts for their initial outlay, the decision should be made on the basis of which of the following?A) Which project has the most total cash flowsB) Which project has the shortest paybackC) Which project has the highest profitability indexD) Which project is completed first
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When a company is evaluating an investment with discounted cash flows, if the investment has a higher risk, the company will use a lower discount rate, and vice versa.
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An investment would be considered a good prospect under which of the following conditions?A) The present value of the cash flows exceeds the initial investment.B) The IRR is lower than the hurdle rate.C) The cash inflows are greater than the initial investment.D) It has a residual value.
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Cash flows used in NPV and IRR analyses include all of the following EXCEPT:A) future increased sales.B) future cost savings.C) depreciation expense.D) residual value.
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Which of the following is TRUE of discounted cash flow methods like NPV and IRR?A) They use simple interest calculations.B) They assume that cash flows will be reinvested when received.C) They focus on the payback period.D) They must follow the rules of GAAP.
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Compound interest used in discounted cash flow calculations assumes that companies will reinvest future cash flows when they are received.
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The rate of return and payback methods DO NOT take into consideration the time value of money. Discounted cash flow methods DO make use of the time value of money.
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When evaluating a potential investment, managers should use more than one measure for making a sound investment decision.
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Considering the four common methods of evaluating investmentsue004payback, rate of return, net present value, and internal rate of returnue004the discounted cash flow methods are superior because they consider both the time value of money and the profitability of the investment.
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Using the NPV method of evaluating investments, a company should consider a project a good investment opportunity as long as the NPV of the total cash flows is positive.
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If a company uses a higher discount rate to calculate NPV of an investment, it reflects a higher level of perceived risk for the investment.
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Jim wants to invest $5,000 a year for the next 25 years to prepare for his retirement. If he wants to calculate the value of his investment at the end of the 25 year period, which of the following tables would be the best for him to use?A) Present Value of $1B) Present Value of an Annuity of $1C) Future Value of $1D) Future Value of an Annuity of $1
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Which of the following MOST accurately describes the term annuity?A) An investment which grows in value over timeB) An installment loan with amortizing principal paymentsC) A stream of equal installments of cash paymentsD) A term life insurance policy
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A company is evaluating 3 possible investments. Each uses straight-line depreciation. See data below: Project AProject BProject CInvestment$400,000 $20,000 $100,000 Salvage value$0 $2,000 $5,000 Net cash flows: Year 1$100,000 $10,000 $40,000 Year 2$100,000 $8,000 $25,000 Year 3$100,000 $5,000 $30,000 Year 4$100,000 $3,000 $10,000 Year 5$100,000 $0 $0 What is the rate of return for Project C?A) 5%B) 4%C) 18%D) 10%
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Clapton Corporation is considering an investment in new equipment costing $900,000. The equipment will be depreciated on a straight-line basis over a ten-year life and is expected to have a salvage value of $90,000. The equipment is expected to generate net cash flows of $140,000 for each of the first five years and $100,000 for each of the last five years. What is the accounting rate of return associated with the equipment investment?A) 12.1%B) 7.9%C) 17.3%D) 9.7%
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Dylan Company is considering an investment in new equipment costing $720,000. The equipment will be depreciated on a straight-line basis over a five-year life and is expected to have a salvage value of $45,000. The equipment is expected to generate net cash flows totaling $970,000 during the five years. What is the rate of return associated with the equipment investment?A) 15.4%B) 16.4%C) 30.4%D) 13.9%
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Pearl Manufacturing is considering an investment in equipment costing $660,000. The equipment will be depreciated on the straight-line basis over an eight-year period with an estimated residual value of $120,000. The investment is expected to generate annual net cash inflows of $135,000 for 8 years. Using the rate of return model, what is the minimum average annual operating income that must be generated from this investment in order to achieve a 14% rate of return?A) $18,900B) $37,800C) $54,600D) $92,400
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Landmark Company is considering an investment in new equipment costing $360,000. The equipment will be depreciated on a straight-line basis over a five-year life and is expected to generate net cash inflows of $70,000 the first year, $80,000 the second year, and $120,000 every year thereafter until the fifth year. What is the payback period for this investment? The residual value is zero.A) 3.25 yearsB) 3.50 yearsC) 3.75 yearsD) 4 years
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Atlantic Company is considering investing in specialized equipment costing $360,000. The equipment has a useful life of 5 years and a residual value of $45,000. Depreciation is calculated using the straight-line method. The expected net cash inflows from the investment are:Year 1$160,000Year 2130,000Year 3100,000Year 455,000Year 5 40,000 $485,000What is the rate of return on the investment?A) 16.8%B) 23.9%C) 18.9%D) 12.4%
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Logan, Inc. is evaluating two possible investments in depreciable plant assets. The company uses the straight-line method of depreciation. The following information is available: Investment AInvestment BInitial capital investment$60,000$90,000Estimated useful life3 years3 yearsEstimated residual valueu2014 0 u2014u2014 0 u2014Estimated annual net cash inflow for 3 years$25,000$40,000Required rate of return10%12%How long is the payback period for Investment B?A) 0.44 yearsB) 2.25 yearsC) 2.35 yearsD) 3.00 years
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ABC Company is adding a new product line that will require an investment of $1,500,000. The product line is estimated to generate cash inflows of $300,000 the first year, $250,000 the second year, and $200,000 each year thereafter for ten more years. What is the payback period?A) 2.73 yearsB) 6.00 yearsC) 6.75 yearsD) 7.25 years
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Which of the following is TRUE regarding capital rationing decisions for capital assets?A) Companies should always choose the investment with the shortest payback period.B) Companies should always choose the investment with the highest net present value.C) Companies should always choose the investment with the highest rate of return.D) Companies should consider several different methods of evaluation before choosing an investment.
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Which capital budgeting method uses accrual accounting, rather than net cash flows, as a basis for calculations?A) PaybackB) Rate of returnC) Net present valueD) Internal rate of return
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Which of the following methods ignores the time value of money?A) PaybackB) Internal rate of returnC) Return on assetsD) Net present value
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The payback method and the rate of return method are powerful, comprehensive evaluation tools, and would normally be sufficient to make a final investment decision.