Given Forecast Errors of 5, 0, −4, and 3, What

question 12

Multiple Choice

Given forecast errors of 5, 0, −4, and 3, what is the mean square error?

• A) 3
• B) 4
• C) 12
• D) 12.5
• E) 50

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Definitions:

Net Present Value

Net present value (NPV) is the calculation used to find today’s value of a future stream of payments and earnings, accounting for the time value of money.

Cost of Capital

The return rate that a company must achieve in order to compensate its investors for the risk of the investment, including the cost of equity and debt.

Industrial Furnace

A device used in manufacturing to provide high temperatures for processes such as melting metals or chemical reactions.

Real Option

The right, but not the obligation, to undertake certain business initiatives, such as deferring, abandoning, expanding, staging, or contracting a project.