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This present value is found by discounting the expected future value by the opportunity cost rate. This is accomplished by reversing the process for finding a future value, as follows: $1.1576 1.053 = $1.00 or, in general terms, Present value = value n years hence (1 + discount rate)n Table 11.6 shows another way of applying the present-value concept to capital expenditure decisions. Consider an investment of $6.50 in an asset that would yield the amounts shown in Table 11.6 if placed in a savings account at 5 percent. At the end of five years, the amounts received from the asset investment would total $7.00 (including the salvage value of the asset), whereas the savings account would be worth $6.50 1.053, or $7.52. Therefore, the $6.50 should not be invested in the asset. The present-value analysis in column (4) of Table 11.6 shows that the present value of the asset investment is $6.30, which is 20 cents less than the amount that would be invested. In other words, the value of the investment opportunity is minus 20 cents. If the amount

To use either one of these tools, go to a campaign s settings and select Keyword Bidding options. You can use Budget Optimizer in campaigns where conversion tracking is not possible. For example, realtors and companies with long (and untrackable) sales cycles might use the Budget Optimizer. When a company sells a $500,000 transmogrifier, it s often not clear which action caused the sale. They re using PPC, booths at trade shows, technical sales teams, and so on. In such cases, the company would just want to drive qualified traffic to the site. When Budget Optimizer is turned on, some keywords become inactive. Google is trying to get you the most clicks, so they ignore keywords they consider low value. If you want those keywords to be active, go to Campaign Settings and increase the budget or the maximum bid. You can

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910 Describe each of the following file-related terms: channel number, mode, access type, restrictions 911 What modes can be selected when opening a sequential data file 912 How are numeric constants stored within a sequential data file 913 How are consecutive numeric constants separated within the same line of a sequential data file 914 Under what conditions must a string be enclosed in quotation marks within a sequential data file 915 Are separators required for consecutive strings within the same line of a sequential data file 916 Within a sequential data file, what is the difference between the Input # statement and the Line Input # statement When is each used 917 What is the purpose of the Input library function How does it differ from the Input # statement 9.

(3) Discount factor 1.05 (1.05) (1.05)

Year 1 Sales revenue Less: variable costs Less: fixed costs* Cash flow from production Sales of equipment Net cash flow

CHAPTER 6:

Year 2 $11,000 7,000 2,000 $2,000 0 $2,000

18 Within a sequential data file, what is the difference between the Print # statement and the Write # statement When is each used 919 What is the purpose of the EOF function What does this function return 920 What is the purpose of the LOF function What does this function return 921 How is new information appended to an existing sequential data file 922 Describe a strategy involving two separate data files that is often used when updating the information in a sequential data file 923 How is a particular record in a random access data file identified How can a particular record be accessed 924 How is the composition of the records within a random access data file defined 925 What is the purpose of the Len function What does this function return 9.

also move the keywords into another ad group or another campaign. You may also leave the keywords in Inactive status; this won t affect the ad group s QS. Budget Optimizer will spend your budget. If you set high budgets, Google will reach those limits. Therefore, set an ad budget that you can afford to pay. Google s ABM tool adjusts bids by location, depending on local results. Google can bid lower in Austin and higher in Pittsburgh, for example. The Google ABM tools also adjust by time of day and day of week. It s tempting to set up ABM and let it manage your PPC. However, this is a bad idea. You need to focus on strategy and campaigns. You must test new keywords, create new ads, and continually improve the QS.

Year 3 $12,000 8,000 2,000 $2,000 1,000 $3,000

$10,000 6,000 2,000 $2,000 0 $2,000

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