IET 334 Final Review questions &
answers graded A+
Norstrom's Criterion - correct answer ✔✔ If the cumulative NCF starts with a negative value and
has only one sign change, then there is exactly one positive solution to the ROR equation.
Descartes' Rule - correct answer ✔✔ The total number of solutions is always less than or equal
to the number of sign changes in the NCF series
Non-Conventional Cash Flows - correct answer ✔✔ A NCF series with more than one sign
change
Conventional Cash Flows - correct answer ✔✔ A series of net cash flows (NCF) with only one
sign change
When evaluating independent choose best option - correct answer ✔✔ False
When making AW comparisons, calculations are based on at least two life cycles - correct
answer ✔✔ False
AW comparisons assume that the alternatives will be needed for the LCM period - correct
answer ✔✔ True
If annual worth (AW) assumptions are met, comparisons require that AW is calculated over the
LCM period. - correct answer ✔✔ False
Rate of Return - correct answer ✔✔ The interest rate paid on the unrecovered balance of
borrowed money so that the final payment brings the balance to zero with interest considered.
, Rate of return is basically determining what interest rate balances all expenses with all - correct
answer ✔✔ True
Capital Recovery (CR) - correct answer ✔✔ The equivalent A that must be earned to recover the
initial investment plus a stated rate of return (MARR) over the expected life.
Clicker: Annual worth (AW) analysis and present worth (PW) analysis yield the same decision,
but from a different perspective. - correct answer ✔✔ True
Annual Worth Main Advantage - correct answer ✔✔ Only need to calculate AW over one life
cycle for each alternative.
Clicker: Independent alternatives are exempt from the equal service requirement. - correct
answer ✔✔ True
Bonds: What are they? - correct answer ✔✔ o A debt financing tool to raise capital
o "IOU"
Bond Types - correct answer ✔✔ Treasury Security
Municipal bond
Mortgage bond
Debenture bond
Capitalized cost is nothing more than the present worth of an indefinite cash flow - correct
answer ✔✔ True
answers graded A+
Norstrom's Criterion - correct answer ✔✔ If the cumulative NCF starts with a negative value and
has only one sign change, then there is exactly one positive solution to the ROR equation.
Descartes' Rule - correct answer ✔✔ The total number of solutions is always less than or equal
to the number of sign changes in the NCF series
Non-Conventional Cash Flows - correct answer ✔✔ A NCF series with more than one sign
change
Conventional Cash Flows - correct answer ✔✔ A series of net cash flows (NCF) with only one
sign change
When evaluating independent choose best option - correct answer ✔✔ False
When making AW comparisons, calculations are based on at least two life cycles - correct
answer ✔✔ False
AW comparisons assume that the alternatives will be needed for the LCM period - correct
answer ✔✔ True
If annual worth (AW) assumptions are met, comparisons require that AW is calculated over the
LCM period. - correct answer ✔✔ False
Rate of Return - correct answer ✔✔ The interest rate paid on the unrecovered balance of
borrowed money so that the final payment brings the balance to zero with interest considered.
, Rate of return is basically determining what interest rate balances all expenses with all - correct
answer ✔✔ True
Capital Recovery (CR) - correct answer ✔✔ The equivalent A that must be earned to recover the
initial investment plus a stated rate of return (MARR) over the expected life.
Clicker: Annual worth (AW) analysis and present worth (PW) analysis yield the same decision,
but from a different perspective. - correct answer ✔✔ True
Annual Worth Main Advantage - correct answer ✔✔ Only need to calculate AW over one life
cycle for each alternative.
Clicker: Independent alternatives are exempt from the equal service requirement. - correct
answer ✔✔ True
Bonds: What are they? - correct answer ✔✔ o A debt financing tool to raise capital
o "IOU"
Bond Types - correct answer ✔✔ Treasury Security
Municipal bond
Mortgage bond
Debenture bond
Capitalized cost is nothing more than the present worth of an indefinite cash flow - correct
answer ✔✔ True
