Sport Finance #2

The __________ forecasts how much cash the organization will have on hand and how much it will need to meet expenses.

Cash budget

Using this method of capital budgeting, expected cash flows are discounted by the project's initial cost of capital to determine when the project will break even.

Discounted payback period

Which of the following is the depreciation method that is most aggressive at allocating loss of useful life to the early years of the asset's use?

Double Declining Balance

Which of the following is the discount rate that makes the present value of the estimated cash flows equal to the initial cost of the investment?

Internal rate of return

What is the process of capital budgeting?

a. Determine initial cost of the project b. Determine the incremental cash flow of a project c. Select capital budget method d. Conduct a post-audit analysis

What is the interest rate that banks charge their best customers?

Prime rate

This budgeting system requires starting the budgeting process with a zero base.

Zero based budgeting

What are the capital budgeting methods?

1. Payback period 2. Discounted payback period 3. Net present value 4. Internal rate of return 5. Modified internal rate of return

When the citizens of Hamilton County, Ohio, decided to raise their taxes to fund two new sports stadiums rather than to raise taxes for something like improving the educational system in the county, they missed a chance to improve the educational system. What is this known as?

An opportunity cost

The initial cost of a capital project is the actual cost of starting the project adjusted for which of the following?

Any installation, delivery or packaging costs/ Discounts to the initial price/ The sale of existing equipment or machinery/ Taxes

The major disadvantages of forming a business under a _____ structure is that there is double taxation of profits, and the cost of forming the business and operating the business is higher than other structures.

C Corps

Which of the following budgets allows management to forecast future requirements related to property, facilities, and major equipment?

Capital expenditure budget

When using zero-based budgeting, each part of the organization in which budget decisions are made is referred to as a __________.

Decision unit

The choices that individuals and organizations make regarding financial management are influenced by which of the following?

Demand/Scarcity/Price

The required rate of return to justify an investment in a capital project is the __________.

Discount rate

The __________ lists the primary activities undertaken by a unit to achieve its goals and allocate dollar amounts to each.

Expense budget

Last year's budget is increased or decreased by a percentage using this method of budgeting (a form of line-item budgeting).

Incremental budgeting

Which capital budgeting method is preferred by most managers as it analyzes cash flows rather than net earnings?

Net present value

Which of the following is a discounted cash flow method that compares the present value of a project's future cash flows to its initial costs?

Net present value

When sport leagues do not expand into a market that can support a franchise, or when they create rules to limit the movement of existing franchises, which of the following economic concepts is being applied?

Scarcity

The vast majority of for-profit businesses in the United States operate as which of the following?

Sole proprietorships

Which of the following methods of depreciation attempts to take the non-linear loss of a fixed asset's value into account with depreciation occurring late after purchase. Using this method, the denominator for a fixed asset with a useful life of five years is 15.

Sum-of-years digits, accelerating depreciation

Which of the following methods of depreciation attempts to take the non-linear loss of a fixed asset's value into account, with depreciation occurring quickly after purchase. Using this method, the denominator for a fixed asset with a useful life of five years is 15.

Sum-of-years digits, decelerating deprecation

Of the following, which is not an advantage of incremental budgeting?

The approach encourages managers to spend up to the budget to ensure that the budget is maintained the following year.

As facility projects can often lead to non-normal cash flows, it is recommended that which of the following be used when developing a capital budget?

Modified internal rate of return

Which of the followings forms of budgeting is preferred in sport as it begins with a floor of expenses while also using cost behavior and cost identification techniques?

Modified zero based budgeting

Of the following capital budgeting methods, which one ignores the time value of money as it fails to take into account the cost of capital?

Payback period

Which of the following is the number of years required to recover the initial capital investment of an organization?

Payback period

This budgeting system is associated with output budgeting in which specific goals and objectives form the framework for a strategic, goal oriented budgeting process.

Program planning budgeting systems

Which of the following is the final step in the capital budgeting process?

Conduct a post-audit analysis

A __________ is a forecast because it is based on projecting future sales.

Revenue budget