Taking the Average Volume Achieved in Several Recent Periods and Using

question 25

Multiple Choice

Taking the average volume achieved in several recent periods and using this data as a prediction of sales in the next period is synonymous with which forecasting technique:

• A) trend projection.
• B) moving average.
• C) exponential smoothing.
• D) naïve approach.
• E) chain ratio method.

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Definitions:

Market Value

The price in the market at which assets or services can currently be exchanged.

Investment's Cost

The total amount of money spent to acquire an investment, including all charges and fees associated with the purchase.

Average Accounting Return Rule

A capital budgeting criterion that measures the profitability of an investment as the average net income divided by the average book value.

Profitability Index Rule

A capital budgeting technique used to decide whether to invest in a project, calculated as the present value of future cash flows divided by the initial investment cost.