Question

Which characteristic is unique to a strategic plan versus an operations plan?
- Project budget
- Goal measurement
- Reporting structure
- Project goals

The company’s management team is developing the company’s goals.

What is an example of strategic planning?
- Identifying resources needed for the yearly budget
- Determining how many seasonal employees to hire

- Developing a seven-year plan to expand operations
- Purchasing vehicles on a three-year lease.

Which calculation compares an amount to be invested with the current values of net cash
inflows?
- Return on equity
- Net present value
- Time value of money
- Return on investment

A company’s cost of capital is 10%
Which IT investment project should be selected by the company’s chief information officer
based on the cost of capital?
- A project that has a net present value of $50,000 and an internal rate of return of 12%
- A project that has a net present value of $50,000 and an internal rate of return of 8%
- A project that has a net present value of -$50,000 and an internal rate of return of 8%
- A project that has a net present value of $0 and an internal rate of return of 10%

Answer 1

Answer 1: Goal measurement

( Explanation:- Strategic plan explains what company's overall goals are and it also takes into account how to measure these set goals. So, Goal measurement is a uniquie feature to a strategic plan)

Answer 2:- Developing a seven-year plan to expand operations

( Explanation - Strategic plan includes a bigger time horizon like 5 to 10 years, where as operational plan includes a lesser time horizon like less than one year. So, Developing a seven-year plan to expand operations is an example of strategic planning)

Answer 3:- Net present value

( Explanation:- Net present value = Present value of net cash inflows from the project or investment - Initial investment. So, Net present value is the amount which compares the amount to be invested with the current values of net cash inflows)

Answer 4:- A project that has a net present value of $50,000 and an internal rate of return of 12%

( Explanation:- The decision Rule used here is:

IRR > Cost of Capital - ( project should be accepted)

IRR = Cost of Capital - ( project provides the minimum return)

IRR < Cost of Capital - ( project should not be accepted)

Along with the above rule, Net Present Value should be postive in order to accept the project because positive NPV means present value of cash inflows is greater than amount o be invested in the project)