June Lives in the Southern Part of Alabama Where Winters

question 296

Multiple Choice

June lives in the southern part of Alabama where winters are normally fairly mild. Last January, during an unusually cold spell, the water pipes in her house froze and burst. She had to look in the Yellow Pages to find a plumber who was able to come out and repair the pipes the same day. Prior to the frozen pipes, the plumber's services represented a(n) :

• A)unsought service.
• B) industrial service.
• C) specialty service.
• D)convenience service.

Determine the accounting rate of return and its application in evaluating investments.

Apply the payback method in evaluating the profitability and risk of investments.

Use real-options analysis and other scenario-based methods in capital budgeting.

Understand the concept of and distinguish between various capital budgeting techniques.

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Definitions:

Par Value

The face value of a bond or the stock value stated in the corporate charter, which is the legal capital per share.

Market Value

The current quoted price at which an asset or service can be bought or sold in an open market.

Stock Split

A corporate action that increases the number of a corporation's outstanding shares by issuing more shares to current shareholders.

Market Price

The current trade value at which a service or asset can be exchanged.