tailieunhanh - Quantitative Methods for Business chapter 8

C H A P T E R 8 Counting the cost – summarizing money variables over time Chapter objectives This chapter will help you to: ■ ■ ■ ■ ■ ■ employ simple and aggregate index numbers to measure price changes over time work out weighted aggregate price indices: Laspeyre and Paasche indices adjust figures for the effects of inflation using price indices apply methods of investment appraisal: accounting rate of return, payback period, | CHAPTER Q Counting the cost -summarizing money variables over time Chapter objectives This chapter will help you to employ simple and aggregate index numbers to measure price changes over time work out weighted aggregate price indices Laspeyre and Paasche indices adjust figures for the effects of inflation using price indices apply methods of investment appraisal accounting rate of return payback period net present value and internal rate of return use the technology investment appraisal methods in EXCEL become acquainted with business uses of investment appraisal In the last two chapters we have looked at ways of summarizing data. In Chapter 6 we concentrated on measuring the location and spread in univariate single variable data in Chapter 7 we focused on measuring the strength and direction in bivariate data. In both chapters the data concerned were cross-sectional data data relating to the same point or period of time. In this chapter and the next we will consider ways of summarizing data relating to different periods of time. 256 Quantitative methods for business Chapter 8 Time-based data consist of numerical observations that can be measured and summarized using the techniques you met in the previous two chapters. We could for instance collect the price of gold at various points in time and calculate the mean price of gold over the period or use correlation analysis to measure the association between the price of gold and the price of silver at various points in time. However often the most important aspect of time-based data is the time factor and the techniques in the previous two chapters would not allow us to bring that out of the data. In this chapter we will look at techniques to summarize money variables that relate to different time periods. We will start by exploring index numbers and how they can be used to summarize the general movements in prices over time. Then we will look at how such price indices can be used to adjust money amounts for the .