1. When examining ratios to determine if a new plan was a success, we would benefit most by:

A. comparing to industry averages.

B comparing to our closest competitor.

C time trend analysis.

D comparing the ratios to zero.

E it is impossible to determine success from ratios.

2. You have some property for sale and have received two offers. The first offer is for $189,000 today in cash. The second offer is the payment of $100,000 today and an additional $100,000 two years from today. If the applicable discount rate is 8.75%, which offer should you accept and why?

A. You should accept the $189,000 today because it has the higher net present value.

B. You should accept the $189,000 today because it has the lower future value.

C. You should accept the second offer because you will receive $200,000 total.

D. You should accept the second offer because you will receive an extra $11,000.

E. You should accept the second offer because it has a present value of $194,555.42.

3. Financial ratios can be compared to all of the following, except:

A. Actual accounting values

B. Previous time periods of the firm

C. Industry averages

D. Other ratios

E. Values before, then after an event.