For a Particular Time Study a Company Would Like to Be

question 27

Multiple Choice

For a particular time study a company would like to be 90% confident that the average job cycle time is within 5% of the true average job cycle time.Assume that the average job cycle time was 15.76 minutes and the standard deviation of the sample was 3.2 minutes.The number of cycles that should be used in this time study would be

• A)45
• B)93
• C)127
• D)236

---

Definitions:

MM Theory

Modigliani-Miller Theorem; a financial theory stating that the market value of a company is independent of its capital structure and dividend policy under certain conditions.

MM Model

The Modigliani-Miller theorem, proposing that in an ideal market, the value of a firm is unaffected by its capital structure.

Financial Leverage

The degree to which a company uses fixed-income securities such as debt and preferred equity in its capital structure.

Tax-Deductible Interest

Interest on loans that can be subtracted from one's taxable income, thereby reducing the overall tax liability.