QUESTION 1

1. You are asked to calculate the Net Present Value of a single project and find that it is a small, positive number. Your recommendation is:

a.Use a lower discount rate to increase the NPV.

b.Proceed with the project.

c.Use a higher discount rate to decrease the NPV.

d.Do not proceed with the project.

QUESTION 2:

You know that the price of a certain good is at equilibrium when...

a.Inventories of the product are growing

b.The supplier's rate of return equals inflation

c.The product is rationed because too many people want to buy it

d.The quantity supplied equals the quantity demanded

QUESTION 3

1. Congratulations: you've won the lottery! Choose your preferred prize, assuming a 5% interest rate.

. a.$1,000,000 in two years.

b.$1,000,000 in one year.

c. $950,000 today.

d.Cannot be determined without knowing the IRR.

QUESTION 4

Why does money invested at a fixed interest rate grow faster and faster?

a.Reward is correlated to risk

b. Induction

c. Acceleration

d.Compounding

QUESTION 5

Michelle's costs for college are:

Tuition: $5,000

Books: $300

Fees: $200

When she goes to college, she must reduce her working hours, so her income is $2,000 less.

She will also have less time with her friends and family, which she values at $1,000.

What is her accounting cost for going to college? (Enter the amount without the "$")

What is her opportunity cost for going to college? (Enter the amount without the "$")

QUESTION 6

Your company is considering a choice between hiring 10 workers or purchasing 3 robots. The workers and robots will then be able to be trained for different purposes. It's uncertain how productive the workers and robots will be because that will depend on future market conditions. This choice can be best analyzed with:

a.Decision Matrix

b.Pro/Con List

c.Intuition

d.Decision Tree

QUESTION 7

1. What is the expected value of a bet on the throw of a 6-sided die, in which you win $100 if it lands on 6, else you get $0?

a.$100

b.$0

c.$50

d.$16.67

QUESTION 8

Quantitative (numbers-based) decision tools like decision matrixes and decision trees are most closely associate with which ethical tradition?

a.Empathetic/Intuitive

b.Micro-economics

c.Deontology (Rules-based)

d.Consequentialism