Exam 6: Evaluating the Financial Impact of Loans and Investments

____ is like a user fee because you are paying to "use" the bank's money.

Which of the following is true of range names?

The present value is the amount, or initial outlay, at the beginning of the transaction.

The depreciation method where depreciation is apportioned based on a declining fractional amount of the asset's life is the ____ method.

The ____ method calculates the rate at which discounted cash flows in and out are equal.

In the IRR function, the values argument is a list of ____.

When cash is received, it is considered negative cash flow.

Case 6-1 Phil has put together the worksheet above with a 5-year cash flow estimate for his shoe company. He needs to explain the chart to his investors. Please answer the questions below using this figure as a reference. -Phil enters the tax rate of 35% in the workbook as a range named Taxrate without first entering the value itself in the workbook. In Excel, you can give a value a range name without actually entering the value in a specific cell. To do so, you use the ____ dialog box.

In a PMT function, the ____ argument is the interest rate per compounding period.

When using the NPV function in Excel, the first cash flow into or out of the financial transaction is assumed to be ____.

The ____ function finds the value of the payment per period, assuming that there are constant payments and a constant interest rate for the duration of the loan.

The ____ depreciation method calculates interest as highest in the first period and decreases in amount each period thereafter.

Case 6-2 Natalie is working on calculating the IRR of a project. Please refer to the figure above as you answer the questions below. -In college, Natalie had to calculate IRR manually so that she would have a good understanding of the way it worked. To do that, she needed to guess an IRR value and substitute it as the ____ in the NPV formula.

Before constructing a formula with a financial function, it is a good idea to determine the timeline of the financial ____________________.

MATCHING Identify the letter of the choice that best matches the word or phrase. -Interest that is paid solely on the amount of the original principal value

The ____ of a loan is NOT directly tax deductible.

If you are calculating payments to a bank (a negative cash flow), your formula requires a positive ____.

When using NPV, ____ are ignored.

The ____________________ is the sum of the cash flows, excluding the initial investment, divided by the investment value.

In a PMT function, the ____ argument is the original principal value at the beginning of the financial transaction.