Capital investment decisions occur on a frequent basis , and it is important for a company to determine its project needs to establish a path for business development . This decision is not as obvious or as simple as it may seem . There is a lot at stake with a large outlay of capital , and the long-term financial impact may be unknown due to the capital outlay decreasing or increasing over time . To help reduce the risk involved in capital investment , a process is required to thoughtfully select the best opportunity for the company . Capital investment ( sometimes also referred to as capital budgeting ) is a company ’ s contribution of funds toward the acquisition of long-lived ( long-term or capital ) assets for further growth . Long-term assets can include investments such as the purchase of new equipment , the replacement of old machinery , the expansion of operations into new facilities , or even the expansion into new products or markets . These capital expenditures are different from operating expenses . An operating expense is a regularly-occurring expense used to maintain the current operations of the company , but a capital expenditure is one used to grow the business and produce a future economic benefit .","hl_sentences":"Capital investment decisions occur on a frequent basis , and it is important for a company to determine its project needs to establish a path for business development . There is a lot at stake with a large outlay of capital , and the long-term financial impact may be unknown due to the capital outlay decreasing or increasing over time . Capital investment ( sometimes also referred to as capital budgeting ) is a company ’ s contribution of funds toward the acquisition of long-lived ( long-term or capital ) assets for further growth .","question":{"cloze_format":"Capital investment decisions often involve all of the following except ________.","normal_format":"Which of the following is NOT often involved in capital investment decisions?","question_choices":["qualitative factors or considerations","short periods of time","large amounts of money","risk"],"question_id":"fs-idm379358192","question_text":"Capital investment decisions often involve all of the following except ________."},"references_are_paraphrase":0},{"answer":{"ans_choice":0,"ans_text":"political prominence"},"bloom":null,"hl_context":"If one or more of the alternatives meets or exceeds the minimum expectations , a preference decision is considered . A preference decision compares potential projects that meet screening decision criteria and will rank the alternatives in order of importance , feasibility , or desirability to differentiate among alternatives . Once the company determines the rank order , it is able to make a decision on the best avenue to pursue ( Figure 11.2 ) . When making the final decision , all financial and non-financial factors are deliberated .","hl_sentences":"A preference decision compares potential projects that meet screening decision criteria and will rank the alternatives in order of importance , feasibility , or desirability to differentiate among alternatives .","question":{"cloze_format":"Preference decisions compare potential projects that meet screening decision criteria and will be ranked in their preference order to differentiate between alternatives with respect to all of the following characteristics except ________.","normal_format":"Preference decisions compare potential projects that meet screening decision criteria and will NOT be ranked in their preference order to differentiate between alternatives with respect to which of the following characteristic?","question_choices":["political prominence","feasibility","desirability","importance"],"question_id":"fs-idm482789072","question_text":"Preference decisions compare potential projects that meet screening decision criteria and will be ranked in their preference order to differentiate between alternatives with respect to all of the following characteristics except ________."},"references_are_paraphrase":null},{"answer":{"ans_choice":3,"ans_text":"D"},"bloom":null,"hl_context":"Alternatives are the options available for investment . For example , if a company needs to purchase new printing equipment , all possible printing equipment options are considered alternatives . Since there are so many alternative possibilities , a company will need to establish baseline criteria for the investment . Baseline criteria are measurement methods that can help differentiate among alternatives . Common measurement methods include the payback method , accounting rate of return , net present value , or internal rate of return . These methods have varying degrees of complexity and will be discussed in greater detail in Evaluate the Payback and Accounting Rate of Return in Capital Investment Decisions and Explain the Time Value of Money and Calculate Present and Future Values of Lump Sums and Annuities","hl_sentences":"Since there are so many alternative possibilities , a company will need to establish baseline criteria for the investment . Common measurement methods include the payback method , accounting rate of return , net present value , or internal rate of return .","question":{"cloze_format":"The ___ would not be an acceptable baseline criterion.","normal_format":"The third step for making a capital investment decision is to establish baseline criteria for alternatives. Which of the following would not be an acceptable baseline criterion?","question_choices":["payback method","accounting rate of return","internal rate of return","inventory turnover"],"question_id":"fs-idm385854864","question_text":"The third step for making a capital investment decision is to establish baseline criteria for alternatives. Which of the following would not be an acceptable baseline criterion?"},"references_are_paraphrase":0},{"answer":{"ans_choice":1,"ans_text":"B"},"bloom":null,"hl_context":" Discounting is the procedure used to calculate the present value of an individual payment or a series of payments that will be received in the future based on an assumed interest rate or return on investment . Let ’ s look at a simple example to explain the concept of discounting .","hl_sentences":"Discounting is the procedure used to calculate the present value of an individual payment or a series of payments that will be received in the future based on an assumed interest rate or return on investment .","question":{"cloze_format":"The process that determines the present value of a single payment or stream of payments to be received is ________.","normal_format":"Which process determines the present value of a single payment or stream of payments to be received?","question_choices":["compounding","discounting","annuity","lump-sum"],"question_id":"fs-idm198862496","question_text":"The process that determines the present value of a single payment or stream of payments to be received is ________."},"references_are_paraphrase":null},{"answer":{"ans_choice":0,"ans_text":"compounding"},"bloom":null,"hl_context":"In our current example , interest is calculated once a year . However , interest can also be calculated in numerous ways . Some of the most common interest calculations are daily , monthly , quarterly , or annually . One concept important to understand in interest calculations is that of compounding . Compounding is the process of earning interest on previous interest earned , along with the interest earned on the original investment . ","hl_sentences":"Compounding is the process of earning interest on previous interest earned , along with the interest earned on the original investment .","question":{"cloze_format":"The process of reinvesting interest earned to generate additional earnings over time is ________.","normal_format":"Which is the process of reinvesting interest earned to generate additional earnings over time?","question_choices":["compounding","discounting","annuity","lump-sum"],"question_id":"fs-idm200590624","question_text":"The process of reinvesting interest earned to generate additional earnings over time is ________."},"references_are_paraphrase":null},{"answer":{"ans_choice":3,"ans_text":"payback period method"},"bloom":null,"hl_context":"A company will be presented with many alternatives for investment . It is up to management to analyze each investment ’ s possibilities using capital budgeting methods . The company will want to first screen each possibility with the payback method and accounting rate of return . The payback method will show the company how long it will take to recoup their investment , while accounting rate of return gives them the profitability of the alternatives . This screening will typically get rid of non-viable options and allow the company to further consider a select few alternatives . A more detailed analysis is found in time-value methods , such as net present value and internal rate of return . Net present value converts future cash flows into today ’ s valuation for comparability purposes to see if an initial outlay of cash is worth future earnings . The internal rate of return determines the minimum expected return on a project given the present value of cash flow expectations and the initial investment . Analyzing these opportunities , with consideration given to time value of money , allows a company to make an informed decision on how to make large capital expenditures . The internal rate of return ( IRR ) and the net present value ( NPV ) methods are types of discounted cash flow analysis that require taking estimated future payments from a project and discounting them into present values . The difference between the two methods is that the NPV calculation determines the project ’ s estimated return in dollars and the IRR provides the percentage rate of return from a project needed to break even . As previously discussed , time value of money methods assume that the value of money today is worth more now than in the future . The payback period and accounting rate of return methods do not consider this concept when performing calculations and analyzing results . That is why they are typically only used as basic screening tools . To decide the best option between alternatives , a company performs preference measurement using tools , such as net present value and internal rate of return that do consider the time value of money concept . Net present value ( NPV ) discounts future cash flows to their present value at the expected rate of return and compares that to the initial investment . NPV does not determine the actual rate of return earned by a project . The internal rate of return ( IRR ) shows the profitability or growth potential of an investment at the point where NPV equals zero , so it determines the actual rate of return a project earns . As the name implies , net present value is stated in dollars , whereas the internal rate of return is stated as an interest rate . Both NPV and IRR require the company to determine a rate of return to be used as the target return rate , such as the minimum required rate of return or the weighted average cost of capital , which will be discussed in Balanced Scorecard and Other Performance Measures . The discount cash flow model assigns a value to a business opportunity using time-value measurement tools . The model considers future cash flows of the project , discounts them back to present time , and compares the outcome to an expected rate of return . If the outcome exceeds the expected rate of return and initial investment cost , the company would consider the investment . If the outcome does not exceed the expected rate of return or the initial investment , the company may not consider investment . When considering the discounted cash flow process , the time value of money plays a major role .","hl_sentences":"The payback method will show the company how long it will take to recoup their investment , while accounting rate of return gives them the profitability of the alternatives . This screening will typically get rid of non-viable options and allow the company to further consider a select few alternatives . The internal rate of return ( IRR ) and the net present value ( NPV ) methods are types of discounted cash flow analysis that require taking estimated future payments from a project and discounting them into present values . The payback period and accounting rate of return methods do not consider this concept when performing calculations and analyzing results . That is why they are typically only used as basic screening tools . To decide the best option between alternatives , a company performs preference measurement using tools , such as net present value and internal rate of return that do consider the time value of money concept . Net present value ( NPV ) discounts future cash flows to their present value at the expected rate of return and compares that to the initial investment . The discount cash flow model assigns a value to a business opportunity using time-value measurement tools .","question":{"cloze_format":"___ does not assign a value to a business opportunity using time-value measurement tools.","normal_format":"Which of the following does not assign a value to a business opportunity using time-value measurement tools?","question_choices":["internal rate of return (IRR) method","net present value (NPV)","discounted cash flow model","payback period method"],"question_id":"fs-idm239047488","question_text":"Which of the following does not assign a value to a business opportunity using time-value measurement tools?"},"references_are_paraphrase":0},{"answer":{"ans_choice":1,"ans_text":"B"},"bloom":null,"hl_context":" The internal rate of return ( IRR ) and the net present value ( NPV ) methods are types of discounted cash flow analysis that require taking estimated future payments from a project and discounting them into present values . The difference between the two methods is that the NPV calculation determines the project ’ s estimated return in dollars and the IRR provides the percentage rate of return from a project needed to break even . As previously discussed , time value of money methods assume that the value of money today is worth more now than in the future . The payback period and accounting rate of return methods do not consider this concept when performing calculations and analyzing results . That is why they are typically only used as basic screening tools . To decide the best option between alternatives , a company performs preference measurement using tools , such as net present value and internal rate of return that do consider the time value of money concept . Net present value ( NPV ) discounts future cash flows to their present value at the expected rate of return and compares that to the initial investment . NPV does not determine the actual rate of return earned by a project . The internal rate of return ( IRR ) shows the profitability or growth potential of an investment at the point where NPV equals zero , so it determines the actual rate of return a project earns . As the name implies , net present value is stated in dollars , whereas the internal rate of return is stated as an interest rate . Both NPV and IRR require the company to determine a rate of return to be used as the target return rate , such as the minimum required rate of return or the weighted average cost of capital , which will be discussed in Balanced Scorecard and Other Performance Measures .","hl_sentences":"The internal rate of return ( IRR ) and the net present value ( NPV ) methods are types of discounted cash flow analysis that require taking estimated future payments from a project and discounting them into present values . The difference between the two methods is that the NPV calculation determines the project ’ s estimated return in dollars and the IRR provides the percentage rate of return from a project needed to break even . Net present value ( NPV ) discounts future cash flows to their present value at the expected rate of return and compares that to the initial investment .","question":{"cloze_format":"The ___ discounts future cash flows to their present value at the expected rate of return, and compares that to the initial investment.","normal_format":"Which of the following discounts future cash flows to their present value at the expected rate of return, and compares that to the initial investment?","question_choices":["internal rate of return (IRR) method","net present value (NPV)","discounted cash flow model","future value method"],"question_id":"fs-idm204855984","question_text":"Which of the following discounts future cash flows to their present value at the expected rate of return, and compares that to the initial investment?"},"references_are_paraphrase":null},{"answer":{"ans_choice":0,"ans_text":"internal rate of return (IRR) method"},"bloom":null,"hl_context":"The internal rate of return ( IRR ) and the net present value ( NPV ) methods are types of discounted cash flow analysis that require taking estimated future payments from a project and discounting them into present values . The difference between the two methods is that the NPV calculation determines the project ’ s estimated return in dollars and the IRR provides the percentage rate of return from a project needed to break even . IRR is the discounted rate ( interest rate ) point at which NPV equals zero . In other words , the IRR is the point at which the present value cash inflows equal the initial investment cost . To consider investment , IRR needs to meet or exceed the required rate of return for the investment type . If IRR does not meet the required rate of return , the company will forgo investment . As previously discussed , time value of money methods assume that the value of money today is worth more now than in the future . The payback period and accounting rate of return methods do not consider this concept when performing calculations and analyzing results . That is why they are typically only used as basic screening tools . To decide the best option between alternatives , a company performs preference measurement using tools , such as net present value and internal rate of return that do consider the time value of money concept . Net present value ( NPV ) discounts future cash flows to their present value at the expected rate of return and compares that to the initial investment . NPV does not determine the actual rate of return earned by a project . The internal rate of return ( IRR ) shows the profitability or growth potential of an investment at the point where NPV equals zero , so it determines the actual rate of return a project earns . As the name implies , net present value is stated in dollars , whereas the internal rate of return is stated as an interest rate . Both NPV and IRR require the company to determine a rate of return to be used as the target return rate , such as the minimum required rate of return or the weighted average cost of capital , which will be discussed in Balanced Scorecard and Other Performance Measures .","hl_sentences":"The difference between the two methods is that the NPV calculation determines the project ’ s estimated return in dollars and the IRR provides the percentage rate of return from a project needed to break even . IRR is the discounted rate ( interest rate ) point at which NPV equals zero . The internal rate of return ( IRR ) shows the profitability or growth potential of an investment at the point where NPV equals zero , so it determines the actual rate of return a project earns .","question":{"cloze_format":"This calculation determines profitability or growth potential of an investment, expressed as a percentage, at the point where NPV equals zero ___ .","normal_format":"Which calculation determines the profitability or growth potential of an investment, expressed as a percentage, at the point where NPV equals zero?","question_choices":["internal rate of return (IRR) method","net present value (NPV)","discounted cash flow model","future value method"],"question_id":"fs-idm440036112","question_text":"This calculation determines profitability or growth potential of an investment, expressed as a percentage, at the point where NPV equals zero"},"references_are_paraphrase":null},{"answer":{"ans_choice":0,"ans_text":"A"},"bloom":null,"hl_context":"A company will be presented with many alternatives for investment . It is up to management to analyze each investment ’ s possibilities using capital budgeting methods . The company will want to first screen each possibility with the payback method and accounting rate of return . The payback method will show the company how long it will take to recoup their investment , while accounting rate of return gives them the profitability of the alternatives . This screening will typically get rid of non-viable options and allow the company to further consider a select few alternatives . A more detailed analysis is found in time-value methods , such as net present value and internal rate of return . Net present value converts future cash flows into today ’ s valuation for comparability purposes to see if an initial outlay of cash is worth future earnings . The internal rate of return determines the minimum expected return on a project given the present value of cash flow expectations and the initial investment . Analyzing these opportunities , with consideration given to time value of money , allows a company to make an informed decision on how to make large capital expenditures . IRR is the discounted rate ( interest rate ) point at which NPV equals zero . In other words , the IRR is the point at which the present value cash inflows equal the initial investment cost . To consider investment , IRR needs to meet or exceed the required rate of return for the investment type . If IRR does not meet the required rate of return , the company will forgo investment . ","hl_sentences":"The internal rate of return determines the minimum expected return on a project given the present value of cash flow expectations and the initial investment . To consider investment , IRR needs to meet or exceed the required rate of return for the investment type . If IRR does not meet the required rate of return , the company will forgo investment .","question":{"cloze_format":"The IRR method assumes that cash flows are reinvested at ________.","normal_format":"How does the IRR method assume that cash flows are reinvested? ","question_choices":["the internal rate of return","the company’s discount rate","the lower of the company’s discount rate or internal rate of return","an average of the internal rate of return and the discount rate"],"question_id":"fs-idm205218496","question_text":"The IRR method assumes that cash flows are reinvested at ________."},"references_are_paraphrase":0}],"string":"[\n {\n \"answer\": {\n \"ans_choice\": 1,\n \"ans_text\": \"B\"\n },\n \"bloom\": null,\n \"hl_context\": \" Capital investment decisions occur on a frequent basis , and it is important for a company to determine its project needs to establish a path for business development . This decision is not as obvious or as simple as it may seem . There is a lot at stake with a large outlay of capital , and the long-term financial impact may be unknown due to the capital outlay decreasing or increasing over time . To help reduce the risk involved in capital investment , a process is required to thoughtfully select the best opportunity for the company . Capital investment ( sometimes also referred to as capital budgeting ) is a company ’ s contribution of funds toward the acquisition of long-lived ( long-term or capital ) assets for further growth . Long-term assets can include investments such as the purchase of new equipment , the replacement of old machinery , the expansion of operations into new facilities , or even the expansion into new products or markets . These capital expenditures are different from operating expenses . An operating expense is a regularly-occurring expense used to maintain the current operations of the company , but a capital expenditure is one used to grow the business and produce a future economic benefit .\",\n \"hl_sentences\": \"Capital investment decisions occur on a frequent basis , and it is important for a company to determine its project needs to establish a path for business development . There is a lot at stake with a large outlay of capital , and the long-term financial impact may be unknown due to the capital outlay decreasing or increasing over time . Capital investment ( sometimes also referred to as capital budgeting ) is a company ’ s contribution of funds toward the acquisition of long-lived ( long-term or capital ) assets for further growth .\",\n \"question\": {\n \"cloze_format\": \"Capital investment decisions often involve all of the following except ________.\",\n \"normal_format\": \"Which of the following is NOT often involved in capital investment decisions?\",\n \"question_choices\": [\n \"qualitative factors or considerations\",\n \"short periods of time\",\n \"large amounts of money\",\n \"risk\"\n ],\n \"question_id\": \"fs-idm379358192\",\n \"question_text\": \"Capital investment decisions often involve all of the following except ________.\"\n },\n \"references_are_paraphrase\": 0\n },\n {\n \"answer\": {\n \"ans_choice\": 0,\n \"ans_text\": \"political prominence\"\n },\n \"bloom\": null,\n \"hl_context\": \"If one or more of the alternatives meets or exceeds the minimum expectations , a preference decision is considered . A preference decision compares potential projects that meet screening decision criteria and will rank the alternatives in order of importance , feasibility , or desirability to differentiate among alternatives . Once the company determines the rank order , it is able to make a decision on the best avenue to pursue ( Figure 11.2 ) . When making the final decision , all financial and non-financial factors are deliberated .\",\n \"hl_sentences\": \"A preference decision compares potential projects that meet screening decision criteria and will rank the alternatives in order of importance , feasibility , or desirability to differentiate among alternatives .\",\n \"question\": {\n \"cloze_format\": \"Preference decisions compare potential projects that meet screening decision criteria and will be ranked in their preference order to differentiate between alternatives with respect to all of the following characteristics except ________.\",\n \"normal_format\": \"Preference decisions compare potential projects that meet screening decision criteria and will NOT be ranked in their preference order to differentiate between alternatives with respect to which of the following characteristic?\",\n \"question_choices\": [\n \"political prominence\",\n \"feasibility\",\n \"desirability\",\n \"importance\"\n ],\n \"question_id\": \"fs-idm482789072\",\n \"question_text\": \"Preference decisions compare potential projects that meet screening decision criteria and will be ranked in their preference order to differentiate between alternatives with respect to all of the following characteristics except ________.\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 3,\n \"ans_text\": \"D\"\n },\n \"bloom\": null,\n \"hl_context\": \"Alternatives are the options available for investment . For example , if a company needs to purchase new printing equipment , all possible printing equipment options are considered alternatives . Since there are so many alternative possibilities , a company will need to establish baseline criteria for the investment . Baseline criteria are measurement methods that can help differentiate among alternatives . Common measurement methods include the payback method , accounting rate of return , net present value , or internal rate of return . These methods have varying degrees of complexity and will be discussed in greater detail in Evaluate the Payback and Accounting Rate of Return in Capital Investment Decisions and Explain the Time Value of Money and Calculate Present and Future Values of Lump Sums and Annuities\",\n \"hl_sentences\": \"Since there are so many alternative possibilities , a company will need to establish baseline criteria for the investment . Common measurement methods include the payback method , accounting rate of return , net present value , or internal rate of return .\",\n \"question\": {\n \"cloze_format\": \"The ___ would not be an acceptable baseline criterion.\",\n \"normal_format\": \"The third step for making a capital investment decision is to establish baseline criteria for alternatives. Which of the following would not be an acceptable baseline criterion?\",\n \"question_choices\": [\n \"payback method\",\n \"accounting rate of return\",\n \"internal rate of return\",\n \"inventory turnover\"\n ],\n \"question_id\": \"fs-idm385854864\",\n \"question_text\": \"The third step for making a capital investment decision is to establish baseline criteria for alternatives. Which of the following would not be an acceptable baseline criterion?\"\n },\n \"references_are_paraphrase\": 0\n },\n {\n \"answer\": {\n \"ans_choice\": 1,\n \"ans_text\": \"B\"\n },\n \"bloom\": null,\n \"hl_context\": \" Discounting is the procedure used to calculate the present value of an individual payment or a series of payments that will be received in the future based on an assumed interest rate or return on investment . Let ’ s look at a simple example to explain the concept of discounting .\",\n \"hl_sentences\": \"Discounting is the procedure used to calculate the present value of an individual payment or a series of payments that will be received in the future based on an assumed interest rate or return on investment .\",\n \"question\": {\n \"cloze_format\": \"The process that determines the present value of a single payment or stream of payments to be received is ________.\",\n \"normal_format\": \"Which process determines the present value of a single payment or stream of payments to be received?\",\n \"question_choices\": [\n \"compounding\",\n \"discounting\",\n \"annuity\",\n \"lump-sum\"\n ],\n \"question_id\": \"fs-idm198862496\",\n \"question_text\": \"The process that determines the present value of a single payment or stream of payments to be received is ________.\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 0,\n \"ans_text\": \"compounding\"\n },\n \"bloom\": null,\n \"hl_context\": \"In our current example , interest is calculated once a year . However , interest can also be calculated in numerous ways . Some of the most common interest calculations are daily , monthly , quarterly , or annually . One concept important to understand in interest calculations is that of compounding . Compounding is the process of earning interest on previous interest earned , along with the interest earned on the original investment . \",\n \"hl_sentences\": \"Compounding is the process of earning interest on previous interest earned , along with the interest earned on the original investment .\",\n \"question\": {\n \"cloze_format\": \"The process of reinvesting interest earned to generate additional earnings over time is ________.\",\n \"normal_format\": \"Which is the process of reinvesting interest earned to generate additional earnings over time?\",\n \"question_choices\": [\n \"compounding\",\n \"discounting\",\n \"annuity\",\n \"lump-sum\"\n ],\n \"question_id\": \"fs-idm200590624\",\n \"question_text\": \"The process of reinvesting interest earned to generate additional earnings over time is ________.\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 3,\n \"ans_text\": \"payback period method\"\n },\n \"bloom\": null,\n \"hl_context\": \"A company will be presented with many alternatives for investment . It is up to management to analyze each investment ’ s possibilities using capital budgeting methods . The company will want to first screen each possibility with the payback method and accounting rate of return . The payback method will show the company how long it will take to recoup their investment , while accounting rate of return gives them the profitability of the alternatives . This screening will typically get rid of non-viable options and allow the company to further consider a select few alternatives . A more detailed analysis is found in time-value methods , such as net present value and internal rate of return . Net present value converts future cash flows into today ’ s valuation for comparability purposes to see if an initial outlay of cash is worth future earnings . The internal rate of return determines the minimum expected return on a project given the present value of cash flow expectations and the initial investment . Analyzing these opportunities , with consideration given to time value of money , allows a company to make an informed decision on how to make large capital expenditures . The internal rate of return ( IRR ) and the net present value ( NPV ) methods are types of discounted cash flow analysis that require taking estimated future payments from a project and discounting them into present values . The difference between the two methods is that the NPV calculation determines the project ’ s estimated return in dollars and the IRR provides the percentage rate of return from a project needed to break even . As previously discussed , time value of money methods assume that the value of money today is worth more now than in the future . The payback period and accounting rate of return methods do not consider this concept when performing calculations and analyzing results . That is why they are typically only used as basic screening tools . To decide the best option between alternatives , a company performs preference measurement using tools , such as net present value and internal rate of return that do consider the time value of money concept . Net present value ( NPV ) discounts future cash flows to their present value at the expected rate of return and compares that to the initial investment . NPV does not determine the actual rate of return earned by a project . The internal rate of return ( IRR ) shows the profitability or growth potential of an investment at the point where NPV equals zero , so it determines the actual rate of return a project earns . As the name implies , net present value is stated in dollars , whereas the internal rate of return is stated as an interest rate . Both NPV and IRR require the company to determine a rate of return to be used as the target return rate , such as the minimum required rate of return or the weighted average cost of capital , which will be discussed in Balanced Scorecard and Other Performance Measures . The discount cash flow model assigns a value to a business opportunity using time-value measurement tools . The model considers future cash flows of the project , discounts them back to present time , and compares the outcome to an expected rate of return . If the outcome exceeds the expected rate of return and initial investment cost , the company would consider the investment . If the outcome does not exceed the expected rate of return or the initial investment , the company may not consider investment . When considering the discounted cash flow process , the time value of money plays a major role .\",\n \"hl_sentences\": \"The payback method will show the company how long it will take to recoup their investment , while accounting rate of return gives them the profitability of the alternatives . This screening will typically get rid of non-viable options and allow the company to further consider a select few alternatives . The internal rate of return ( IRR ) and the net present value ( NPV ) methods are types of discounted cash flow analysis that require taking estimated future payments from a project and discounting them into present values . The payback period and accounting rate of return methods do not consider this concept when performing calculations and analyzing results . That is why they are typically only used as basic screening tools . To decide the best option between alternatives , a company performs preference measurement using tools , such as net present value and internal rate of return that do consider the time value of money concept . Net present value ( NPV ) discounts future cash flows to their present value at the expected rate of return and compares that to the initial investment . The discount cash flow model assigns a value to a business opportunity using time-value measurement tools .\",\n \"question\": {\n \"cloze_format\": \"___ does not assign a value to a business opportunity using time-value measurement tools.\",\n \"normal_format\": \"Which of the following does not assign a value to a business opportunity using time-value measurement tools?\",\n \"question_choices\": [\n \"internal rate of return (IRR) method\",\n \"net present value (NPV)\",\n \"discounted cash flow model\",\n \"payback period method\"\n ],\n \"question_id\": \"fs-idm239047488\",\n \"question_text\": \"Which of the following does not assign a value to a business opportunity using time-value measurement tools?\"\n },\n \"references_are_paraphrase\": 0\n },\n {\n \"answer\": {\n \"ans_choice\": 1,\n \"ans_text\": \"B\"\n },\n \"bloom\": null,\n \"hl_context\": \" The internal rate of return ( IRR ) and the net present value ( NPV ) methods are types of discounted cash flow analysis that require taking estimated future payments from a project and discounting them into present values . The difference between the two methods is that the NPV calculation determines the project ’ s estimated return in dollars and the IRR provides the percentage rate of return from a project needed to break even . As previously discussed , time value of money methods assume that the value of money today is worth more now than in the future . The payback period and accounting rate of return methods do not consider this concept when performing calculations and analyzing results . That is why they are typically only used as basic screening tools . To decide the best option between alternatives , a company performs preference measurement using tools , such as net present value and internal rate of return that do consider the time value of money concept . Net present value ( NPV ) discounts future cash flows to their present value at the expected rate of return and compares that to the initial investment . NPV does not determine the actual rate of return earned by a project . The internal rate of return ( IRR ) shows the profitability or growth potential of an investment at the point where NPV equals zero , so it determines the actual rate of return a project earns . As the name implies , net present value is stated in dollars , whereas the internal rate of return is stated as an interest rate . Both NPV and IRR require the company to determine a rate of return to be used as the target return rate , such as the minimum required rate of return or the weighted average cost of capital , which will be discussed in Balanced Scorecard and Other Performance Measures .\",\n \"hl_sentences\": \"The internal rate of return ( IRR ) and the net present value ( NPV ) methods are types of discounted cash flow analysis that require taking estimated future payments from a project and discounting them into present values . The difference between the two methods is that the NPV calculation determines the project ’ s estimated return in dollars and the IRR provides the percentage rate of return from a project needed to break even . Net present value ( NPV ) discounts future cash flows to their present value at the expected rate of return and compares that to the initial investment .\",\n \"question\": {\n \"cloze_format\": \"The ___ discounts future cash flows to their present value at the expected rate of return, and compares that to the initial investment.\",\n \"normal_format\": \"Which of the following discounts future cash flows to their present value at the expected rate of return, and compares that to the initial investment?\",\n \"question_choices\": [\n \"internal rate of return (IRR) method\",\n \"net present value (NPV)\",\n \"discounted cash flow model\",\n \"future value method\"\n ],\n \"question_id\": \"fs-idm204855984\",\n \"question_text\": \"Which of the following discounts future cash flows to their present value at the expected rate of return, and compares that to the initial investment?\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 0,\n \"ans_text\": \"internal rate of return (IRR) method\"\n },\n \"bloom\": null,\n \"hl_context\": \"The internal rate of return ( IRR ) and the net present value ( NPV ) methods are types of discounted cash flow analysis that require taking estimated future payments from a project and discounting them into present values . The difference between the two methods is that the NPV calculation determines the project ’ s estimated return in dollars and the IRR provides the percentage rate of return from a project needed to break even . IRR is the discounted rate ( interest rate ) point at which NPV equals zero . In other words , the IRR is the point at which the present value cash inflows equal the initial investment cost . To consider investment , IRR needs to meet or exceed the required rate of return for the investment type . If IRR does not meet the required rate of return , the company will forgo investment . As previously discussed , time value of money methods assume that the value of money today is worth more now than in the future . The payback period and accounting rate of return methods do not consider this concept when performing calculations and analyzing results . That is why they are typically only used as basic screening tools . To decide the best option between alternatives , a company performs preference measurement using tools , such as net present value and internal rate of return that do consider the time value of money concept . Net present value ( NPV ) discounts future cash flows to their present value at the expected rate of return and compares that to the initial investment . NPV does not determine the actual rate of return earned by a project . The internal rate of return ( IRR ) shows the profitability or growth potential of an investment at the point where NPV equals zero , so it determines the actual rate of return a project earns . As the name implies , net present value is stated in dollars , whereas the internal rate of return is stated as an interest rate . Both NPV and IRR require the company to determine a rate of return to be used as the target return rate , such as the minimum required rate of return or the weighted average cost of capital , which will be discussed in Balanced Scorecard and Other Performance Measures .\",\n \"hl_sentences\": \"The difference between the two methods is that the NPV calculation determines the project ’ s estimated return in dollars and the IRR provides the percentage rate of return from a project needed to break even . IRR is the discounted rate ( interest rate ) point at which NPV equals zero . The internal rate of return ( IRR ) shows the profitability or growth potential of an investment at the point where NPV equals zero , so it determines the actual rate of return a project earns .\",\n \"question\": {\n \"cloze_format\": \"This calculation determines profitability or growth potential of an investment, expressed as a percentage, at the point where NPV equals zero ___ .\",\n \"normal_format\": \"Which calculation determines the profitability or growth potential of an investment, expressed as a percentage, at the point where NPV equals zero?\",\n \"question_choices\": [\n \"internal rate of return (IRR) method\",\n \"net present value (NPV)\",\n \"discounted cash flow model\",\n \"future value method\"\n ],\n \"question_id\": \"fs-idm440036112\",\n \"question_text\": \"This calculation determines profitability or growth potential of an investment, expressed as a percentage, at the point where NPV equals zero\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 0,\n \"ans_text\": \"A\"\n },\n \"bloom\": null,\n \"hl_context\": \"A company will be presented with many alternatives for investment . It is up to management to analyze each investment ’ s possibilities using capital budgeting methods . The company will want to first screen each possibility with the payback method and accounting rate of return . The payback method will show the company how long it will take to recoup their investment , while accounting rate of return gives them the profitability of the alternatives . This screening will typically get rid of non-viable options and allow the company to further consider a select few alternatives . A more detailed analysis is found in time-value methods , such as net present value and internal rate of return . Net present value converts future cash flows into today ’ s valuation for comparability purposes to see if an initial outlay of cash is worth future earnings . The internal rate of return determines the minimum expected return on a project given the present value of cash flow expectations and the initial investment . Analyzing these opportunities , with consideration given to time value of money , allows a company to make an informed decision on how to make large capital expenditures . IRR is the discounted rate ( interest rate ) point at which NPV equals zero . In other words , the IRR is the point at which the present value cash inflows equal the initial investment cost . To consider investment , IRR needs to meet or exceed the required rate of return for the investment type . If IRR does not meet the required rate of return , the company will forgo investment . \",\n \"hl_sentences\": \"The internal rate of return determines the minimum expected return on a project given the present value of cash flow expectations and the initial investment . To consider investment , IRR needs to meet or exceed the required rate of return for the investment type . If IRR does not meet the required rate of return , the company will forgo investment .\",\n \"question\": {\n \"cloze_format\": \"The IRR method assumes that cash flows are reinvested at ________.\",\n \"normal_format\": \"How does the IRR method assume that cash flows are reinvested? \",\n \"question_choices\": [\n \"the internal rate of return\",\n \"the company’s discount rate\",\n \"the lower of the company’s discount rate or internal rate of return\",\n \"an average of the internal rate of return and the discount rate\"\n ],\n \"question_id\": \"fs-idm205218496\",\n \"question_text\": \"The IRR method assumes that cash flows are reinvested at ________.\"\n },\n \"references_are_paraphrase\": 0\n }\n]"},"chapter":{"kind":"number","value":11,"string":"11"},"chapter_text":{"kind":"string","value":" 11.1 Describe Capital Investment Decisions and How They Are Applied \n\n Assume that you own a small printing store that provides custom printing applications for general business use. Your printers are used daily, which is good for business but results in heavy wear on each printer. After some time, and after a few too many repairs, you consider whether it is best to continue to use the printers you have or to invest some of your money in a new set of printers. A capital investment decision like this one is not an easy one to make, but it is a common occurrence faced by companies every day. Companies will use a step-by-step process to determine their capital needs, assess their ability to invest in a capital project, and decide which capital expenditures are the best use of their resources. \n\n Fundamentals of Capital Investment Decisions \n\n Capital investment (sometimes also referred to as capital budgeting ) is a company’s contribution of funds toward the acquisition of long-lived (long-term or capital) assets for further growth. Long-term assets can include investments such as the purchase of new equipment, the replacement of old machinery, the expansion of operations into new facilities, or even the expansion into new products or markets. These capital expenditures are different from operating expenses. An operating expense is a regularly-occurring expense used to maintain the current operations of the company, but a capital expenditure is one used to grow the business and produce a future economic benefit. \n\n Capital investment decisions occur on a frequent basis, and it is important for a company to determine its project needs to establish a path for business development. This decision is not as obvious or as simple as it may seem. There is a lot at stake with a large outlay of capital, and the long-term financial impact may be unknown due to the capital outlay decreasing or increasing over time. To help reduce the risk involved in capital investment, a process is required to thoughtfully select the best opportunity for the company. \n\n The process for capital decision-making involves several steps: \n\n Determine capital needs for both new and existing projects. \n\n Identify and establish resource limitations. \n\n Establish baseline criteria for alternatives. \n\n Evaluate alternatives using screening and preference decisions. \n\n Make the decision. \n\n The company must first determine its needs by deciding what capital improvements require immediate attention. For example, the company may determine that certain machinery requires replacement before any new buildings are acquired for expansion. Or, the company may determine that the new machinery and building expansion both require immediate attention. This latter situation would require a company to consider how to choose which investment to pursue first, or whether to pursue both capital investments concurrently. \n\n Concepts In Practice Brexit The decision to invest money in capital expenditures may not only be impacted by internal company objectives, but also by external factors. In 2016, Great Britain voted to leave the European Union (EU) (termed “Brexit”), which separates their trade interests and single-market economy from other participating European nations. This has led to uncertainty for United Kingdom (UK) businesses. \n\n Because of this instability, capital spending slowed or remained stagnant immediately following the Brexit vote and has not yet recovered growth momentum. 1 The largest decrease in capital spending has occurred in the expansions of businesses into new markets. The UK is expected to separate from the EU in 2019. 1 G. Jackson “UK Business Investment Stalls in Year since Brexit Vote.” The Financial Times . August 24, 2017. https://www.ft.com/content/daff3ffe-88ac-11e7-8bb1-5ba57d47eff7 \n\n The second step, exploring resource limitations, evaluates the company’s ability to invest in capital expenditures given the availability of funds and time. Sometimes a company may have enough resources to cover capital investments in many projects. Many times, however, they only have enough resources to invest in a limited number of opportunities. If this is the situation, the company must evaluate both the time and money needed to acquire each asset. Time allocation considerations can include employee commitments and project set-up requirements. Fund limitations may result from a lack of capital fundraising, tied-up capital in non-liquid assets, or extensive up-front acquisition costs that extend beyond investment means ( Table 11.1 ). Once the ability to invest has been established, the company needs to establish baseline criteria for alternatives. \n\n Resource Limitations \n\n Time Considerations \n\n Money Considerations \n\n Employee commitments \n\n Project set-up \n\n Time-frame necessary to secure financing \n\n Lack of liquidity \n\n Tied up in non-liquid assets \n\n Up-front acquisition costs \n\n Table 11.1 When resources are limited, capital budgeting procedures are needed. \n\n Alternatives are the options available for investment. For example, if a company needs to purchase new printing equipment, all possible printing equipment options are considered alternatives. Since there are so many alternative possibilities, a company will need to establish baseline criteria for the investment. Baseline criteria are measurement methods that can help differentiate among alternatives. Common measurement methods include the payback method, accounting rate of return, net present value, or internal rate of return. These methods have varying degrees of complexity and will be discussed in greater detail in Evaluate the Payback and Accounting Rate of Return in Capital Investment Decisions and Explain the Time Value of Money and Calculate Present and Future Values of Lump Sums and Annuities \n\n To evaluate alternatives, businesses will use the measurement methods to compare outcomes. The outcomes will not only be compared against other alternatives, but also against a predetermined rate of return on the investment (or minimum expectation) established for each project consideration. The rate of return concept is discussed in more detail in Balanced Scorecard and Other Performance Measures . A company may use experience or industry standards to predetermine factors used to evaluate alternatives. Alternatives will first be evaluated against the predetermined criteria for that investment opportunity, in a screening decision. The screening decision allows companies to remove alternatives that would be less desirable to pursue given their inability to meet basic standards. For example, if there were three different printing equipment options and a minimum return had been established, any printers that did not meet that minimum return requirement would be removed from consideration. \n\n If one or more of the alternatives meets or exceeds the minimum expectations, a preference decision is considered. A preference decision compares potential projects that meet screening decision criteria and will rank the alternatives in order of importance, feasibility, or desirability to differentiate among alternatives. Once the company determines the rank order, it is able to make a decision on the best avenue to pursue ( Figure 11.2 ). When making the final decision, all financial and non-financial factors are deliberated. \n\n Ethical Considerations Volkswagen Diesel Emissions Scandal Sometimes a company makes capital decisions due to outside pressures or unforeseen circumstances. The New York Times reported in 2015 that the car company Volkswagen was “scarred by an emissions-cheating scandal,” and “would need to cut its budget next year for new technology and research—a reversal after years of increased spending aimed at becoming the world’s biggest carmaker.” 2 This was a huge setback for Volkswagen , not only because the company had budgeted and planned to become the largest car company in the world, but also because the scandal damaged its reputation and set it back financially. 2 Jack Ewing and Jad Mouawad. “VW Cuts Its R&D Budget in Face of Costly Emissions Scandal.” New York Times . November 20, 2015. https://www.nytimes.com/2015/11/21/business/international/volkswagen-emissions-scandal.html \n\n Volkswagen “set aside about 9 billion euros ($9.6 billion) to cover costs related to making the cars compliant with pollution regulations;” however, the sums were “unlikely to cover the costs of potential legal judgments or other fines.” 3 All of the costs related to the company’s unethical actions needed to be included in the capital budget, as company resources were limited. Volkswagen used capital budgeting procedures to allocate funds for buying back the improperly manufactured cars and paying any legal claims or penalties. Other companies might take other approaches, but an unethical action that results in lawsuits and fines often requires an adjustment to the capital decision-making process. 3 Jack Ewing and Jad Mouawad. “VW Cuts Its R&D Budget in Face of Costly Emissions Scandal.” New York Times . November 20, 2015. https://www.nytimes.com/2015/11/21/business/international/volkswagen-emissions-scandal.html \n\n Let’s broadly consider what the five-step process for capital decision-making looks like for Melanie’s Sewing Studio. Melanie owns a sewing studio that produces fabric patterns for wholesale. \n\n Determine capital needs for both new and existing projects. \n\nUpon review of her future needs, Melanie determines that her five-year-old commercial sewing machine could be replaced. The old machine is still working, but production has slowed in recent months with an increase in repair needs and replacement parts. Melanie expects a new sewing machine to make her production process more efficient, which could also increase her current business volume. She decides to explore the possibility of purchasing a new sewing machine. \n\n Identify and establish resource limitations. \n\nMelanie must consider if she has enough time and money to invest in a new sewing machine. The Sewing Studio has been in business for three years and has shown steady financial growth year over year. Melanie expects to make enough profit to afford a capital investment of $50,000. If she does purchase a new sewing machine, she will have to train her staff on how to use the machine and will have to cease production while the new machine is installed. She anticipates a loss of $20,000 for training and production time. The estimation of the $20,000 loss is based on the downtime in production for both labor and product output. \n\n Establish baseline criteria for alternatives. \n\nMelanie is considering two different sewing machines for purchase. Before she evaluates which option is a better investment, she must establish minimum requirements for the investment. She determines that the new machine must return her initial investment back to her in three years at a rate of 20%, and the initial investment cost cannot exceed her future earnings. This established a baseline for what she considers reasonable for this type of investment, and she will not consider any investment alternative that does not meet these minimum criteria. \n\n Evaluate alternatives using screening and preference decisions. \n\nNow that she has established minimum requirements for the new machine, she can evaluate each of these machines to see if they meet or exceed her criteria. The first sewing machine costs $45,000. She is expected to recoup her initial investment in two-and-a-half years. The return rate is 25%, and her future earnings would exceed the initial cost of the machine. \n\nThe second machine will cost $55,000. She expects to recoup her initial investment in three years. The return rate is $18%, and her future earnings would be less than the initial cost of the machine. \n\n Make the decision. \n\nMelanie will now decide which sewing machine to invest in. The first machine meets or exceeds her established minimum requirements in cost, payback, return rate, and future earnings compared to the initial investment. For the second machine, the $55,000 cost exceeds the cash available for investment. In addition, the second machine does not meet the return rate of 20% and the anticipated future earnings does not compare well to the value of the initial investment. Based on this information, Melanie would choose to purchase the first sewing machine. \n\nThese steps make it seem as if narrowing down the alternatives and making a selection is a simple process. However, a company needs to use analysis techniques, including the payback method and the accounting rate of return method, as well as other, more sophisticated and complex techniques, to help them make screening and preference decisions. These techniques can assist management in making a final investment decision that is best for the company. We begin learning about these various screening and preference decisions in Evaluate the Payback and Accounting Rate of Return in Capital \n\n Link to Learning \n\n More and more companies are using capital expenditure software in budgeting analysis management. One company using this software is Solarcentury, a United Kingdom-based solar company. Read this case study on Solarcentury’s advantages to capital budgeting resulting from this software investment to learn more. \n 11.2 Evaluate the Payback and Accounting Rate of Return in Capital Investment Decisions \n\n Many companies are presented with investment opportunities continuously and must sift through both viable and nonviable options to identify the best possible expenditure for business growth. The process to select the best option requires careful budgeting and analysis. In conducting their analysis, a company may use various evaluation methods with differing inputs and analysis features. These methods are often broken into two broad categories: (1) those that consider the time value of money, or the fact that a dollar today differs from a dollar in the future due to inflation and the ability to invest today's money for future growth, and (2) those analysis methods that do not consider the time value of money. We will examine the non-time value methods first. \n\n Non-Time Value Methods \n\n Non-time value methods do not compare the value of a dollar today to the value of a dollar in the future and are often used as screening tools. Two non-time value evaluative methods are the payback method and the accounting rate of return. \n\n Fundamentals of the Payback Method \n\n The payback method (PM) computes the length of time it takes a company to recover their initial investment. In other words, it calculates how long it will take until either the amount earned or the costs saved are equal to or greater than the costs of the project. This can be useful when a company is focused solely on retrieving their funds from a project investment as quickly as possible. \n\n Businesses do not want their money tied up in capital assets that have limited liquidity. The longer money is unavailable, the less ability the company has to use these funds for other growth purposes. This extended length of time is also a concern because it produces a riskier opportunity. Therefore, a company would like to get their money returned to them as quickly as possible. One way to focus on this is to consider the payback period when making a capital budget decision. The payback method is limited in that it only considers the time frame to recoup an investment based on expected annual cash flows, and it doesn’t consider the effects of the time value of money. \n\n The payback period is calculated when there are even or uneven annual cash flows. Cash flow is money coming into or out of the company as a result of a business activity. A cash inflow can be money received or cost savings from a capital investment. A cash outflow can be money paid or increased cost expenditures from capital investment. Cash flow will estimate the ability of the company to pay long-term debt, its liquidity, and its ability to grow. Cash flows appear on the statement of cash flows. Cash flows are different than net income. Net income will represent all company activities affecting revenues and expenses regardless of the occurrence of a cash transaction and will appear on the income statement. \n\n A company will estimate the future cash inflows and outflows to be generated by the capital investment. It’s important to remember that the cash inflows can be caused by an increase in cash receipts or by a reduction in cash expenditures. For example, if a new piece of equipment would reduce the production costs for a company from $120,000 a year to $80,000 a year, we would consider this is a $40,000 cash inflow. While the company does not actually receive the $40,000 in cash, it does save $40,000 in operating costs giving it a positive cash inflow of $40,000. \n\n Cash flow can also be generated through increased production volume. For example, a company purchases a new building costing $100,000 that will allow them to house more space for production. This new space allows them to produce more product to sell, which increases cash sales by $300,000. The $300,000 is a new cash inflow. \n\n The difference between cash inflows and cash outflows is the net cash inflow or outflow, depending on which cash flow is larger. \n\n Annual net cash flows are then related to the initial investment to determine a payback period in years. When the expected net annual cash flow is an even amount each period, payback can be computed as follows: \n\n The result is the number of years it will take to recover the cash made in the original investment. For example, a printing company is considering a printer with an initial investment cost of $150,000. They expect an annual net cash flow of $20,000. The payback period is \n\n Payback Period = $150,000 $20,000 = 7.5 years Payback Period = $150,000 $20,000 = 7.5 years \n\n The initial investment cost of $150,000 is divided by the annual cash flow of $20,000 to compute an expected payback period of 7.5 years. Depending on the company’s payback period requirements for this type of investment, they may pass this option through the screening process to be considered in a preference decision. For example, the company might require a payback period of 5 years. Since 7.5 years is greater than 5 years, the company would probably not consider moving this alternative to a preference decision. If the company required a payback period of 9 years, the company would consider moving this alternative to a preference decision, since the number of years is less than the requirement. \n\n When net annual cash flows are uneven over the years, as opposed to even as in the previous example, the company requires a more detailed calculation to determine payback. Uneven cash flows occur when different amounts are returned each year. In the previous printing company example, the initial investment cost was $150,000 and even cash flows were $20,000 per year. However, in most examples, organizations experience uneven cash flows in a multiple-year ownership period. For example, an uneven cash flow distribution might be a return of $10,000 in year one, $20,000 in years two and three, $15,000 in years four and five, and $20,000 in year six and beyond. \n\n In this case, then, the payback period is 8.5 years. \n\n In a second example of the payback period for uneven cash flows, consider a company that will need to determine the net cash flow for each period and figure out the point at which cash flows equal or exceed the initial investment. This could arise in the middle of a year, prompting a calculation to determine the partial year payback. \n\n The company would add the partial year payback to the prior years’ payback to get the payback period for uneven cash flows. For example, a company may make an initial investment of $40,000 and receive net cash flows of $10,000 in years one and two, $5,000 in year three and four, and $7,500 for years five and beyond. \n\n We know that somewhere between years 5 and 6, the company recovers the money. In years one and two they recovered a total of $20,000 (10,000 + 10,000), in years three and four they recovered and additional $10,000 (5,000 + 5,000), and in year five they recovered $7,500, for a total through year five of $37,500. This left an outstanding balance after year five of $2,500 (40,000 – 37,500) to fully recover the costs of the investment. In year six, they had a cash flow of $7,500. This is more than they needed to recoup their initial investment. To get a more specific calculation, we need to compute the partial year’s payback. \n\n Partial Year Payback = $2,500 $7,500 = 0.33 years (rounded) Partial Year Payback = $2,500 $7,500 = 0.33 years (rounded) \n\n Therefore, the total payback period is 5.33 years (5 years + 0.33 years). \n\n Demonstration of the Payback Method \n\n For illustration, consider Baby Goods Manufacturing (BGM), a large manufacturing company specializing in the production of various baby products sold to retailers. BGM is considering investment in a new metal press machine. The payback period is calculated as follows: \n\n Payback Period = $50,000 $15,000 = 3.33 years Payback Period = $50,000 $15,000 = 3.33 years \n\n We divide the initial investment of $50,000 by the annual inflow of $15,000 to arrive at a payback period of 3.33 years. Assume that BGM will not allow a payback period of more than 7 years for this type of investment. Since this computed payback period meets their initial screening requirement, they can pass this investment opportunity on to a preference decision level. If BGM had an expected or maximum allowable payback period of 2 years, the same investment would not have passed their screening requirement and would be dropped from consideration. \n\n To illustrate the concept of uneven cash flows, let’s assume BGM shows the following expected net cash flows instead. Recall that that the initial investment in the metal press machine is $50,000. \n\n Between years 6 and 7, the initial investment outstanding balance is recovered. To determine the more specific payback period, we calculate the partial year payback. \n\n Payback Period = $5,000 $10,000 = 0.5 years Payback Period = $5,000 $10,000 = 0.5 years \n\n The total payback period is 6.5 years (6 years + 0.5 years). \n\n Think It Through Capital Investment You are the accountant at a large firm looking to make a capital investment in a future project. Your company is considering two project investments. Project A’s payback period is 3 years, and Project B’s payback period is 5.5 years. \n\n Your company requires a payback period of no more than 5 years on such projects. Which project should they further consider? Why? Is there an argument that can be made to advance either project or neither project? Why? What other factors might be necessary to make that decision? \n\n Fundamentals of the Accounting Rate of Return Method \n\n The accounting rate of return (ARR) computes the return on investment considering changes to net income. It shows how much extra income the company could expect if it undertakes the proposed project. Unlike the payback method, ARR compares income to the initial investment rather than cash flows. This method is useful because it reviews revenues, cost savings, and expenses associated with the investment and, in some cases, can provide a more complete picture of the impact, rather than focusing solely on the cash flows produced. However, ARR is limited in that it does not consider the value of money over time, similar to the payback method. \n\n The accounting rate of return is computed as follows: \n\n Incremental revenues represent the increase to revenue if the investment is made, as opposed to if the investment is rejected. The increase to revenues includes any cost savings that occur because of the project. Incremental expenses show the change to expenses if the project is accepted as opposed to maintaining the current conditions. Incremental expenses also include depreciation of the acquired asset. The difference between incremental revenues and incremental expenses is called the incremental net income . The initial investment is the original amount invested in the project; however, any salvage (residual) value for the capital asset needs to be subtracted from the initial investment before obtaining ARR. \n\n The concept of salvage value was addressed in Long-Term Assets . Basically, it is the anticipated future fair market value (FMV) of an asset when it is to be sold or used as a trade-in for a replacement asset. For example, assume that you bought a commercial printer for $40,000 five years ago with an anticipated salvage value of $8,000, and you are now considering replacing it. Assume that as of the date of replacement after the five-year holding period, the old printer has an FMV of $8,000. If the new printer has a purchase price of $45,000 and the seller is going to take the old printer as a trade-in, then you would owe $37,000 for the new printer. If the printer had been sold for $8,000, instead being used as a trade-in, the $8,000 could have been used as a down payment, and the company would still owe $37,000. This amount is the price of $45,000 minus the FMV value of $8,000. \n\n There is one more point to make with this example. The fair market value is not the same as the book value. The book value is the original cost less the accumulated depreciation that has been taken. For example, if you buy a long-term asset for $60,000 and the accumulated depreciation that you have taken is $42,000, then the asset’s book value would be $18,000. The fair market value could be more, less, or the same as the book value. \n\n For example, a piano manufacturer is considering investment in a new tuning machine. The initial investment will cost $300,000. Incremental revenues, including cost savings, are $200,000, and incremental expenses, including depreciation, are $125,000. ARR is computed as: \n\n ARR = ( $ 200,000 − $ 125,000 ) $ 300,000 = 0.25 or 25% ARR = ( $ 200,000 − $ 125,000 ) $ 300,000 = 0.25 or 25% \n\n This outcome means the company can expect an increase of 25% to net income, or an extra 25 cents on each dollar, if they make the investment. The company will have a minimum expected return that this project will need to meet or exceed before further consideration is given. ARR, like payback method, should not be used as the sole determining factor to invest in a capital asset. Also, note that the ARR calculation does not consider uneven annual income growth, or other depreciation methods besides straight-line depreciation. \n\n Demonstration of the Accounting Rate of Return Method \n\n Returning to the BGM example, the company is still considering the metal press machine because it passed the payback period method of less than 7 years. BGM has a set rate of return of 25% expected for the metal press machine investment. The company expects incremental revenues of $22,000 and incremental expenses of $12,000. Remember that the initial investment cost is $50,000. BGM computes ARR as follows: \n\n ARR = ( $ 20,000 − $ 5,000 ) $ 50,000 = 0.3 or 30% ARR = ( $ 20,000 − $ 5,000 ) $ 50,000 = 0.3 or 30% \n\n The ARR in this situation is 30%, exceeding the required hurdle rate of 25%. A hurdle rate is the minimum required rate of return on an investment to consider an alternative for further evaluation. In this case, BGM would move this investment option to a preference decision level. If we were to add a salvage value of $5,000 into the situation, the computation would change as follows: \n\n ARR = ( $ 20,000 − $ 5,000 ) $ 50,000 − $ 5,000 ) = 0.33 or 33% (rounded) . ARR = ( $ 20,000 − $ 5,000 ) $ 50,000 − $ 5,000 ) = 0.33 or 33% (rounded) . \n\n The ARR still exceeds the hurdle rate of 25%, so BGM would still forward the investment opportunity for further consideration. Let’s say BGM changes their required return rate to 35%. In both cases, the project ARR would be less than the required rate, so BGM would not further consider either investment. \n\n Your Turn Analyzing Hurdle Rate Turner Printing is looking to invest in a printer, which costs $60,000. Turner expects a 15% rate of return on this printer investment. The company expects incremental revenues of $30,000 and incremental expenses of $15,000. There is no salvage value for the printer. What is the accounting rate of return (ARR) for this printer? Did it meet the hurdle rate of 15%? \n\n Solution \n\n ARR is 25% calculated as ($30,000 – $15,000) / $60,000. 25% exceeds the hurdle rate of 15%, so the company would consider moving this alternative to a preference decision. \n\n Both the payback period and the accounting rate of return are useful analytical tools in certain situations, particularly when used in conjunction with other evaluative techniques. In certain situations, the non-time value methods can provide relevant and useful information. However, when considering projects with long lives and significant costs to initiate, there are more advanced models that can be used. These models are typically based on time value of money principles, the basics of which are explained here. \n\n Your Turn Analyzing Investments Your company is considering making an investment in equipment that will cost $240,000. The equipment is expected to generate annual cash flows of $60,000, provide incremental cash revenues of $200,000, and provide incremental cash expenses of $140,000 annually. Depreciation expense is included in the $140,000 incremental expense. \n\n Calculate the payback period and the accounting rate of return. \n\n Solution \n\n Payback Period = $240,000 60,000 = 4 years ARR = ( $200,000 – $140,000 ) 240,000 = 25% Payback Period = $240,000 60,000 = 4 years ARR = ( $200,000 – $140,000 ) 240,000 = 25% \n 11.3 Explain the Time Value of Money and Calculate Present and Future Values of Lump Sums and Annuities \n\n Your mother gives you $100 cash for a birthday present, and says, “Spend it wisely.” You want to purchase the latest cellular telephone on the market but wonder if this is really the best use of your money. You have a choice: You can spend the money now or spend it in the future. What should you do? Is there a benefit to spending it now as opposed to saving for later use? Does time have an impact on the value of your money in the future? Businesses are confronted with these questions and more when deciding how to allocate investment money. A major factor that affects their investment decisions is the concept of the time value of money. \n\n Time Value of Money Fundamentals \n\n The concept of the time value of money asserts that the value of a dollar today is worth more than the value of a dollar in the future. This is typically because a dollar today can be used now to earn more money in the future. There is also, typically, the possibility of future inflation, which decreases the value of a dollar over time and could lead to a reduction in economic buying power. \n\n At this point, potential effects of inflation can probably best be demonstrated by a couple of examples. The first example is the Ford Mustang. The first Ford Mustang sold in 1964 for $2,368. Today’s cheapest Mustang starts at a list price of $25,680. While a significant portion of this increase is due to additional features on newer models, much of the increase is due to the inflation that occurred between 1964 and 2019. \n\n Similar inflation characteristics can be demonstrated with housing prices. After World War II, a typical small home often sold for between $16,000 and $30,000. Many of these same homes today are selling for hundreds of thousands of dollars. Much of the increase is due to the location of the property, but a significant part is also attributed to inflation. The annual inflation rate for the Mustang between 1964 and 2019 was approximately 4.5%. If we assume that the home sold for $16,500 in 1948 and the price of the home in 2019 was about $500,000, that’s an annual appreciation rate of almost 5%. \n\n Today’s dollar is also more valuable because there is less risk than if the dollar was in a long-term investment, which may or may not yield the expected results. On the other hand, delaying payment from an investment may be beneficial if there is an opportunity to earn interest. The longer payment is delayed, the more available earning potential there is. This can be enticing to businesses and may persuade them to take on the risk of deferment. \n\n Businesses consider the time value of money before making an investment decision. They need to know what the future value is of their investment compared to today’s present value and what potential earnings they could see because of delayed payment. These considerations include present and future values. \n\n Before you learn about present and future values, it is important to examine two types of cash flows: lump sums and annuities. \n\n Lump Sums and Annuities \n\n A lump sum is a one-time payment or repayment of funds at a particular point in time. A lump sum can be either a present value or future value. For a lump sum, the present value is the value of a given amount today. For example, if you deposited $5,000 into a savings account today at a given rate of interest, say 6%, with the goal of taking it out in exactly three years, the $5,000 today would be a present value-lump sum. Assume for simplicity’s sake that the account pays 6% at the end of each year, and it also compounds interest on the interest earned in any earlier years. \n\n In our current example, interest is calculated once a year. However, interest can also be calculated in numerous ways. Some of the most common interest calculations are daily, monthly, quarterly, or annually. One concept important to understand in interest calculations is that of compounding. Compounding is the process of earning interest on previous interest earned, along with the interest earned on the original investment. \n\n Returning to our example, if $5,000 is deposited into a savings account for three years earning 6% interest compounded annually, the amount the $5,000 investment would be worth at the end of three years is $5,955.08 ($5,000 × 1.06 – $5,300 × 1.06 – $5,618 × 1.06 – $5,955.08). The $5,955.08 is the future value of $5,000 invested for three years at 6%. More formally, future value is the amount to which either a single investment or a series of investments will grow over a specified time at a given interest rate or rates. The initial $5,000 investment is the present value. Again, more formally, present value is the current value of a single future investment or a series of investments for a specified time at a given interest rate or rates. Another way to phrase this is to say the $5,000 is the present value of $5,955.08 when the initial amount was invested at 6% for three years. The interest earned over the three-year period would be $955.08, and the remaining $5,000 would be the original deposit of $5,000. \n\n As shown in the example the future value of a lump sum is the value of the given investment at some point in the future. It is also possible to have a series of payments that constitute a series of lump sums. Assume that a business receives the following four cash flows. They constitute a series of lump sums because they are not all the same amount. \n\n The company would be receiving a stream of four cash flows that are all lump sums. In some situations, the cash flows that occur each time period are the same amount; in other words, the cash flows are even each period. These types of even cash flows occurring at even intervals, such as once a year, are known as an annuity . The following figure shows an annuity that consists of four payments of $12,000 made at the end of each of four years. \n\n The nature of cash flows—single sum cash flows, even series of cash flows, or uneven series of cash flows—have different effects on compounding. \n\n Compounding \n\n Compounding can be applied in many types of financial transactions, such as funding a retirement account or college savings account. Assume that an individual invests $10,000 in a four-year certificate of deposit account that pays 10% interest at the end of each year (in this case 12/31). Any interest earned during the year will be retained until the end of the four-year period and will also earn 10% interest annually. \n\n Through the effects of compounding—earning interest on interest—the investor earned $4,641 in interest from the four-year investment. If the investor had removed the interest earned instead of reinvesting it in the account, the investor would have earned $1,000 a year for four years, or $4,000 interest ($10,000 × 10% = $1,000 per year × 4 years = $4,000 total interest). Compounding is a concept that is used to determine future value (more detailed calculations of future value will be covered later in this section). But what about present value? Does compounding play a role in determining present value? The term applied to finding present value is called discounting. \n\n Discounting \n\n Discounting is the procedure used to calculate the present value of an individual payment or a series of payments that will be received in the future based on an assumed interest rate or return on investment. Let’s look at a simple example to explain the concept of discounting. \n\n Assume that you want to accumulate sufficient funds to buy a new car and that you will need $5,000 in three years. Also, assume that your invested funds will earn 8% a year for the three years, and you reinvest any interest earned during the three-year period. If you wanted to take out adequate funds from your savings account to fund the three-year investment, you would need to invest $3,969.16 today and invest it in the account earning 8% for three years. After three years, the $3,969.16 would earn $1,030.84 and grow to exactly the $5,000 that you will need. This is an example of discounting. Discounting is the method by which we take a future value and determine its current, or present, value. An understanding of future value applications and calculations will aid in the understanding of present value uses and calculations. \n\n Future Value \n\n There are benefits to investing money now in hopes of a larger return in the future. These future earnings are possible because of interest payments received as an incentive for tying up money long-term. Knowing what these future earnings will be can help a business decide if the current investment is worth the long-term potential. Recall, the future value (FV) as the value of an investment after a certain period of time. Future value considers the initial amount invested, the time period of earnings, and the earnings interest rate in the calculation. For example, a bank would consider the future value of a loan based on whether a long-time client meets a certain interest rate return when determining whether to approve the loan. \n\n To determine future value, the bank would need some means to determine the future value of the loan. The bank could use formulas, future value tables, a financial calculator, or a spreadsheet application. The same is true for present value calculations. Due to the variety of calculators and spreadsheet applications, we will present the determination of both present and future values using tables. In many college courses today, these tables are used primarily because they are relatively simple to understand while demonstrating the material. For those who prefer formulas, the different formulas used to create each table are printed at the top of the corresponding table. In many finance classes, you will learn how to utilize the formulas. Regarding the use of a financial calculator, while all are similar, the user manual or a quick internet search will provide specific directions for each financial calculator. As for a spreadsheet application such as Microsoft Excel, there are some common formulas, shown in Table 11.2 . In addition, Appendix C provides links to videos and tutorials on using specific aspects of Excel, such as future and present value techniques. \n\n Excel Formulas \n\n Time Value Component \n\n Excel Formula Shorthand \n\n Excel Formula Detailed \n\n Present Value Single Sum \n\n =PV \n\n =PV(Rate, N, Payment, FV) \n\n Future Value Single Sum \n\n +FV \n\n =FV(Rate, N, Payment, PV) \n\n Present Value Annuity \n\n =PV \n\n =PV(Rate, N, Payment, FV, Type) \n\n Future Value Annuity \n\n =FV \n\n =FV(Rate, N, Payment, PV, Type) \n\n Net Present Value \n\n =NPV \n\n =NPV(Rate, CF2, CF3, CF4) + CF1 \n\n Internal Rate of Return \n\n =IRR \n\n =IRR(Invest, CF1, CF2, CF3) \n\n Rate = annual interest rate \n\n N = number of periods \n\n Payment = annual payment amount, entered as a negative number, use 0 when calculating both present value of a single sum and future value of a single sum \n\n FV = future value \n\n PV = current or present value \n\n Type = 0 for regular annuity, 1 for annuity due \n\n CF = cash flow for a period, thus CF1 – cash flow period 1, CF2 – cash flow period 2, etc. \n\n Invest = initial investment entered as a negative number \n\n Table 11.2 \n\n Since we will be using the tables in the examples in the body of the chapter, it is important to know there are four possible table, each used under specific conditions ( Table 11.3 . \n\n Time Value of Money Tables \n\n Situation \n\n Table Heading \n\n Future Value – Lump Sum \n\n Future Value of $1 \n\n Future Value – Annuity (even payment stream) \n\n Future Value of an Annuity \n\n Present Value – Lump Sum \n\n Present Value of $1 \n\n Present Value – Annuity (even payment stream) \n\n Present Value of an Annuity \n\n Table 11.3 \n\n In the prior situation, the bank would use either the Future Value of $1 table or Future Value of an Ordinary Annuity table, samples of which are provided in Appendix B . To use the correct table, the bank needs to determine whether the customer will pay them back at the end of the loan term or periodically throughout the term of the loan. The Future Value of $1 table is used if the customer will pay back at the end of the period; if the payments will be made periodically throughout the term of the loan, they will use the Future Value of an Annuity table. Choosing the correct table to use is critical for accurate determination of the future value. The application in other business matters is the same: a business needs to also consider if they are making an investment with a repayment in one lump sum or in an annuity structure before choosing a table and making the calculation. In the tables, the columns show interest rates ( i ) and the rows show periods ( n ). The interest columns represent the anticipated interest rate payout for that investment. Interest rates can be based on experience, industry standards, federal fiscal policy expectations, and risk investment. Periods represent the number of years until payment is received. The intersection of the expected payout years and the interest rate is a number called a future value factor. The future value factor is multiplied by the initial investment cost to produce the future value of the expected cash flows (or investment return). \n\n Future Value of $1 \n\n A lump sum payment is the present value of an investment when the return will occur at the end of the period in one installment. To determine this return, the Future Value of $1 table is used. \n\n For example, you are saving for a vacation you plan to take in 6 years and want to know how much your initial savings will yield in the future. You decide to place $4,500 in an investment account now that yields an anticipated annual return of 8%. Looking at the FV table, n = 6 years, and i = 8%, which return a future value factor of 1.587. Multiplying this factor by the initial investment amount of $4,500 produces $7,141.50. This means your initial savings of $4,500 will be worth approximately $7,141.50 in 6 years. \n\n Future Value of an Ordinary Annuity \n\n An ordinary annuity is one in which the payments are made at the end of each period in equal installments. A future value ordinary annuity looks at the value of the current investment in the future, if periodic payments were made throughout the life of the series. \n\n For example, you are saving for retirement and expect to contribute $10,000 per year for the next 15 years to a 401(k) retirement plan. The plan anticipates a periodic interest yield of 12%. How much would your investment be worth in the future meeting these criteria? In this case, you would use the Future Value of an Ordinary Annuity table. The relevant factor where n = 15 and i = 12% is 37.280. Multiplying the factor by the amount of the cash flow yields a future value of these installment savings of (37.280 × $10,000) $372,800. Therefore, you could expect your investment to be worth $372,800 at the end of 15 years, given the parameters. \n\n Let's now examine how present value differs from future value in use and computation. \n\n Your Turn Determining Future Value Determine the future value for each of the following situations. Use the future value tables provided in Appendix B when needed, and round answers to the nearest cent where required. \n\n You are saving for a car and you put away $5,000 in a savings account. You want to know how much your initial savings will be worth in 7 years if you have an anticipated annual interest rate of 5%. \n\n You are saving for retirement and make contributions of $11,500 per year for the next 14 years to your 403(b) retirement plan. The interest rate yield is 8%. \n\n Solution \n\n A. Use FV of $1 table. Future value factor where n = 7 and i = 5 is 1.407. 1.407 × 5,000 = $7,035. B. Use FV of an ordinary annuity table. Future value factor where n = 14 and i = 8 is 24.215. 24.215 × 11,500 = $278,472.50. \n\n Present Value \n\n It is impossible to compare the value or potential purchasing power of the future dollar to today’s dollar; they exist in different times and have different values. Present value (PV) considers the future value of an investment expressed in today’s value. This allows a company to see if the investment’s initial cost is more or less than the future return. For example, a bank might consider the present value of giving a customer a loan before extending funds to ensure that the risk and the interest earned are worth the initial outlay of cash. \n\n Similar to the Future Value tables, the columns show interest rates ( i ) and the rows show periods ( n ) in the Present Value tables. Periods represent how often interest is compounded (paid); that is, periods could represent days, weeks, months, quarters, years, or any interest time period. For our examples and assessments, the period ( n ) will almost always be in years. The intersection of the expected payout years ( n ) and the interest rate ( i ) is a number called a present value factor. The present value factor is multiplied by the initial investment cost to produce the present value of the expected cash flows (or investment return). \n\n The two tables provided in Appendix B for present value are the Present Value of $1 and the Present Value of an Ordinary Annuity. As with the future value tables, choosing the correct table to use is critical for accurate determination of the present value. \n\n Present Value of $1 \n\n When referring to present value, the lump sum return occurs at the end of a period. A business must determine if this delayed repayment, with interest, is worth the same as, more than, or less than the initial investment cost. If the deferred payment is more than the initial investment, the company would consider an investment. \n\n To calculate present value of a lump sum, we should use the Present Value of $1 table. For example, you are interested in saving money for college and want to calculate how much you would need put in the bank today to return a sum of $40,000 in 10 years. The bank returns an interest rate of 3% per year during these 10 years. Looking at the PV table, n = 10 years and i = 3% returns a present value factor of 0.744. Multiplying this factor by the return amount of $40,000 produces $29,760. This means you would need to put in the bank now approximately $29,760 to have $40,000 in 10 years. \n\n As mentioned, to determine the present value or future value of cash flows, a financial calculator, a program such as Excel, knowledge of the appropriate formulas, or a set of tables must be used. Though we illustrate examples in the text using tables, we recognize the value of these other calculation instruments and have included chapter assessments that use multiple approaches to determining present and future value. Knowledge of different approaches to determining present and future value is useful as there are situations, such as having fractional interest rates, 8.45% for example, in which a financial calculator or a program such as Excel would be needed to accurately determine present or future value. \n\n Annuity Table \n\n As discussed previously, annuities are a series of equal payments made over time, and ordinary annuities pay the equal installment at the end of each payment period within the series. This can help a business understand how their periodic returns translate into today’s value. \n\n For example, assume that Sam needs to borrow money for college and anticipates that she will be able to repay the loan in $1,200 annual payments for each of 5 years. If the lender charges 5% per year for similar loans, how much cash would the bank be willing to lend Sam today? In this case, she would use the Present Value of an Ordinary Annuity table in Appendix B , where n = 5 and i = 5%. This yields a present value factor of 4.329. The current value of the cash flow each period is calculated as 4.329 × $1,200 = $5,194.80. Therefore, Sam could borrow $5,194.80 now given the repayment parameters. \n\n Our focus has been on examples of ordinary annuities (annuities due and other more complicated annuity examples are addressed in advanced accounting courses). With annuities due , the cash flow occurs at the start of the period. For example, if you wanted to deposit a lump sum of money into an account and make monthly rent payments starting today, the first payment would be made the same day that you made the deposit into the funding account. Because of this timing difference in the withdrawals from the annuity due, the process of calculating annuity due is somewhat different from the methods that you’ve covered for ordinary annuities. \n\n Your Turn Determining Present Value Determine the present value for each of the following situations. Use the present value tables provided in Appendix B when needed, and round answers to the nearest cent where required. \n\n You are saving for college and you want to return a sum of $100,000 in 12 years. The bank returns an interest rate of 5% after these 12 years. \n\n You need to borrow money for college and can afford a yearly payment to the lending institution of $1,000 per year for the next 8 years. The interest rate charged by the lending institution is 3% per year. \n\n Solution \n\n a. Use PV of $1 table. Present value factor where n = 12 and i = 5 is 0.557. 0.557 × $100,000 = $55,700. b. Use PV of an ordinary annuity table. Present value factor where n = 8 and i = 3 is 7.020. 7.020 × $1,000 = $7,020. \n\n Link to Learning \n\n For a lucky few, winning the lottery can be a dream come true and the option to take a one-time payout or receive payments over several years does not seem to matter at the time. This lottery payout calculator shows how time value of money may affect your take-home winnings. \n 11.4 Use Discounted Cash Flow Models to Make Capital Investment Decisions \n\n Your company, Rudolph Incorporated, has begun analyzing two potential future project alternatives that have passed the basic screening using the non–time value methods of determining the payback period and the accounting rate of return. Both proposed projects seem reasonable, but your company typically selects only one option to pursue. Which one should you choose? How will you decide? A discounted cash flow model can assist with this process. In this section, we will discuss two commonly used time value of money–based options: the net present value method (NPV) and the internal rate of return (IRR). Both of these methods are based on the discounted cash flow process. \n\n Fundamentals of the Discounted Cash Flow Model \n\n The discount cash flow model assigns a value to a business opportunity using time-value measurement tools. The model considers future cash flows of the project, discounts them back to present time, and compares the outcome to an expected rate of return. If the outcome exceeds the expected rate of return and initial investment cost, the company would consider the investment. If the outcome does not exceed the expected rate of return or the initial investment, the company may not consider investment. When considering the discounted cash flow process, the time value of money plays a major role. \n\n Time Value-Based Methods \n\n As previously discussed, time value of money methods assume that the value of money today is worth more now than in the future. The payback period and accounting rate of return methods do not consider this concept when performing calculations and analyzing results. That is why they are typically only used as basic screening tools. To decide the best option between alternatives, a company performs preference measurement using tools, such as net present value and internal rate of return that do consider the time value of money concept. Net present value (NPV) discounts future cash flows to their present value at the expected rate of return and compares that to the initial investment. NPV does not determine the actual rate of return earned by a project. The internal rate of return (IRR) shows the profitability or growth potential of an investment at the point where NPV equals zero, so it determines the actual rate of return a project earns. As the name implies, net present value is stated in dollars, whereas the internal rate of return is stated as an interest rate. Both NPV and IRR require the company to determine a rate of return to be used as the target return rate, such as the minimum required rate of return or the weighted average cost of capital, which will be discussed in Balanced Scorecard and Other Performance Measures . \n\n A positive NPV implies that the present value of the cash inflows from the project are greater than the present value of the cash outflows, which represent the expenses and costs associated with the project. In an NPV calculation, a positive NPV is typically considered a potentially good investment or project. However, other extenuating circumstances should be considered. For example, the company might not wish to borrow the necessary funding to make the investment because the company might be anticipating a downturn in the national economy. \n\n An IRR analysis compares the calculated IRR with either a predetermined rate of return or the cost of borrowing the money to invest in the project in order to determine whether a potential investment or project is favorable. For example, assume that the investment or equipment purchase is expected to generate an IRR of 15% and the company’s expected rate of return is 12%. In this case, similar to the NPV calculation, we assume that the proposed investment would be undertaken. However, remember that other factors must be considered, as they are with NPV. \n\n When considering cash inflows—whether using NPV or IRR—the accountant should examine both profits generated or expenses reduced. Investments that are made may generate additional revenue or could reduce production costs. Both cases assume that the new product or other type of investment generates a positive cash inflow that will be compared to the cost outflows to determine whether there is an overall positive or negative net present value. \n\n Additionally, a company would determine whether the projects being considered are mutually exclusive or not. If the projects or investment options are mutually exclusive, the company can evaluate and identify more than one alternative as a viable project or investment, but they can only invest in one option. For example, if a company needs one new delivery truck, it might solicit proposals from five different truck dealers and conduct NPV and IRR evaluations. Even if all proposals pass the financial requirements of the NPV and IRR methods, only one proposal will be accepted. \n\n Another consideration occurs when a company has the ability to evaluate and accept multiple proposals. For example, an automobile manufacturer is considering expanding its number of dealerships in the United States over the next ten-year period and has allocated $30,000,000 to buy the land. They could purchase any number of properties. They conduct NPV and IRR analyses of fifteen properties and determine that four meet their required standards and market feasibility needs and then purchase those four properties. The opportunities were not mutually exclusive: the number of properties purchased was driven by research and expansion projections, not by their need for only one option. \n\n Continuing Application Capital Budgeting Decisions Gearhead Outfitters has expanded to many locations throughout its twenty-plus years in business. How did company management decide to expand? One of the financial tools a business can use is capital budgeting, which addresses many different issues involving the use of current cash flow for future return. As you’ve learned, capital outlay decisions can be evaluated through payback period, net present value, and methods involving rates of return. \n\n With this in mind, think about the capital budgeting issues Gearhead ’s management might have faced. For example, in deciding to expand, should the company buy a building or lease one? What method should be used to evaluate this? Purchasing a building might require more initial outlay, but the company will retain an asset. How will such a decision affect the bottom line? With respect to equipment, Gearhead could maintain a fleet of vehicles. Should the vehicles be purchased or leased? What will need to be considered in the process? \n\n In developing and maintaining its strategy for sustainability, a business must not only consider day-to-day operations, but also address long-term decisions. Common capital budgeting items like equipment purchases to increase efficiency or reduce costs, decisions about replacement versus repair, and expansion all involve significant cash outlay. How will these items be evaluated? How long will recouping the initial investment take? How much revenue will be generated (or costs saved) through capital outlay? Does the company require a minimum rate of return before it moves forward with investment? If so, how is that return determined? Considering Gearhead ’s decision to expand, what are some specific capital budgeting decisions important for the company to consider in their long-term strategy? \n\n Basic Characteristics of the Net Present Value Model \n\n Net present value helps companies choose between alternatives at a particular point in time by determining which produces the higher NPV. To determine the NPV, the initial investment is subtracted from the present value of cash inflows and outflows associated with a project at a required rate of return. If the outcome is positive, the company should consider investment. If the outcome is negative, the company would forgo investment. \n\n We previously discussed the calculation for present value using the present value tables, where n is the number of years and i is the expected interest rate. Once the present value factor is determined, it is multiplied by the expected net cash flows to produce the present value of future cash flows. The initial investment is subtracted from this present value calculation to determine the net present value. \n\n Recall that the Present Value of $1 table is used for a lump sum payout, whereas the Present Value of an Ordinary Annuity table is used for a series of equal payments occurring at the end of each period. Taking this distinction one step further, NPV requires use of different tables depending on whether the future cash flows are equal or unequal in each time period. If the cash flows each period are equal, the company uses the Present Value of an Ordinary Annuity table, where the present value factor is multiplied by the cash flow amount for one period to get the present value. If the cash flows each period are unequal, the company uses the Present Value of $1 table, where the total present value is the sum of each of the unequal cash flows multiplied by the appropriate present value factor for each time period. This concept is discussed in the following example. \n\n Assume that your company, Rudolph Incorporated, is determining the NPV for a new X-ray machine. The X-ray machine has an initial investment of $200,000 and an expected cash flow of $40,000 each period for the next 10 years. The expected $40,000 cash flows from the new X-ray machine can be attributed to either additional revenue generated or cost savings realized by more efficient operations of the new machine. Since these annual cash flows of $40,000 are the same amount in each period over the ten-years this will be a stream of annuity amounts received. The required rate of return on such an investment is 8%. The present value factor ( i = 8, n = 10) is 6.710 using the Present Value of an Ordinary Annuity table. Multiplying the present value factor (6.710) by the equal cash flow ($40,000) gives a present value of $268,400. NPV is found by taking the present value of $268,400 and subtracting the initial investment of $200,000 to arrive at $68,400. This is a positive NPV, so the company would consider investment. \n\n If there are two investments that have a positive NPV, and the investments are mutually exclusive, meaning only one can be chosen, the more profitable of the two investments is typically the appropriate one for a company to choose. We can also use the profitability index to compare them. The profitability index measures the amount of profit returned for each dollar invested in a project. This is particularly useful when projects being evaluated are of a different size, as the profitability index scales the projects to make them comparable. The profitability index is found by taking the present value of the net cash flows and dividing by the initial investment cost. \n\n For example, Rudolph Incorporated is considering the X-ray machine that had present value cash flows of $268,400 (not considering salvage value) and an initial investment cost of $200,000. Another X-ray equipment option, option B, produces present value cash flows of $290,000 and an initial investment cost of $240,000. The profitability index is computed as follows. \n\n Option A: $268,400 $200,000 = 1.342 Option B: $290,000 $240,000 = 1.208 Option A: $268,400 $200,000 = 1.342 Option B: $290,000 $240,000 = 1.208 \n\n Based on this outcome, the company would invest in Option A, the project with a higher profitability index of 1.342. \n\n If there were unequal cash flows each period, the Present Value of $1 table would be used with a more complex calculation. Each year’s present value factor is determined and multiplied by that year’s cash flow. Then all cash flows are added together to get one overall present value figure. This overall present value figure is used when finding the difference between present value and the initial investment cost. \n\n For example, let’s say the X-ray machine information is the same, except now cash flows are as follows: \n\n To find the overall present value, the following calculations take place using the present value of $1 table. \n\n The Present Value of $1 table is used because, each year, a new “lump sum” cash flow is received, so the cash flow in each period is different. The cash flows are treated as one-time lump sum payouts during that year. The present value for each period looks at each year’s present value factor at an interest rate of 8%. All the PVs are added together for a total present value of $219,990. The initial investment of $200,000 is subtracted from the $219,990 to arrive at a positive NPV of $19,990. In this case, the company would consider investment since the outcome is positive. (More complex considerations, such as depreciation, the effects of income taxes, and inflation, which could affect the overall NPV, are covered in advanced accounting courses.) \n\n Your Turn Analyzing a Postage Meter Investment Yellow Industries is considering investment in a new postage meter system. The postage meter system would have an initial investment cost of $135,000. Annual net cash flows are $40,000 for the next 5 years, and the expected interest rate return is 10%. Calculate net present value and decide whether or not Yellow Industries should invest in the new postage meter system. \n\n Solution \n\n Use the Present Value of an Ordinary Annuity table. Present value factor at n = 5 and i = 10% is 3.791. Present value = 3.791 × $40,000 = $151,640. NPV = $151,640 − $135,000 = $16,640. In this case, Yellow Industries should invest since the NPV is positive. \n\n Calculation and Discussion of the Results of the Net Present Value Model \n\n To demonstrate NPV, assume that a company, Rayford Machining, is considering buying a drill press that will have an initial investment cost of $50,000 and annual cash flows of $10,000 for the next 7 years. Assume that Rayford expects a 5% rate of return on such an investment. We need to determine the NPV when cash flows are equal. The present value factor ( i = 5, n = 7) is 5.786 using the Present Value of an Ordinary Annuity table. We multiply 5.786 by the equal cash flow of $10,000 to get a present value of $57,860. NPV is found by taking the present value of $57,860 and subtracting the initial investment of $50,000 to arrive at $7,860. This is a positive NPV, so the company would consider the investment. \n\n Let’s say Rayford Machining has another option, Option B, for a drill press purchase with an initial investment cost of $56,000 that produces present value cash flows of $60,500. The profitability index is computed as follows. \n\n Option A: $57,860 $50,000 = 1.157 Option B: $60,500 $56,000 = 1.080 Option A: $57,860 $50,000 = 1.157 Option B: $60,500 $56,000 = 1.080 \n\n Based on this outcome, the company would invest in Option A, the project with a higher profitability potential of 1.157. \n\n Now let’s assume cash flows are unequal. Unequal cash flow information for Rayford Machining is summarized here. \n\n To find the overall present value, the following calculations take place using the Present Value of $1 table. \n\n The present value for each period looks at each year’s present value factor at an interest rate of 5%. All individual year present values are added together for a total present value of $44,982. The initial investment of $50,000 is subtracted from the $44,982 to arrive at a negative NPV of $5,018. In this case, Rayford Machining would not invest, since the outcome is negative. The negative NPV value does not mean the investment would be unprofitable; rather, it means the investment does not return the desired 5% the company is looking for in the investments that it makes. \n\n Basic Characteristics of the Internal Rate of Return Model \n\n The internal rate of return model allows for the comparison of profitability or growth potential among alternatives. All external factors, such as inflation, are removed from calculation, and the project with the highest return rate percentage is considered for investment. \n\n IRR is the discounted rate (interest rate) point at which NPV equals zero. In other words, the IRR is the point at which the present value cash inflows equal the initial investment cost. To consider investment, IRR needs to meet or exceed the required rate of return for the investment type. If IRR does not meet the required rate of return, the company will forgo investment. \n\n To find IRR using the present value tables, we need to know the cash flow number of return periods ( n ) and the intersecting present value factor. To calculate present value factor, we use the following formula. \n\n We find the present value factor in the present value table in the row with the corresponding number of periods ( n ). We find the matching interest rate ( i ) at this present value factor. The corresponding interest rate at the number of periods ( n ) is the IRR. When cash flows are equal, use the Present Value of an Ordinary Annuity table to find IRR. \n\n For example, a car manufacturer needs to replace welding equipment. The initial investment cost is $312,000 and each annual net cash flow is $49,944 for the next 9 years. We need to find the internal rate of return for this welding equipment. The expected rate of return for such a purchase is 6%. In this case, n = 9 and the present value factor is computed as follows. \n\n Present Value Factor = $312,000 $49,944 = 6.247 (rounded) Present Value Factor = $312,000 $49,944 = 6.247 (rounded) \n\n Looking at the Present Value of an Ordinary Annuity table, where n = 9 and the present value factor is 6.247, we discover that the corresponding return rate is 8%. This exceeds the expected return rate, so the company would typically invest in the project. \n\n If there is more than one viable option, the company will select the alternative with the highest IRR that exceeds the expected rate of return. \n\n Our tables are limited in scope, and therefore, a present value factor may fall in between two interest rates. When this is the case, you may choose to identify an IRR range instead of a single interest rate figure. A spreadsheet program or financial calculator can produce a more accurate result and can also be used when cash flows are unequal. \n\n Calculation and Discussion of the Results of the Internal Rate of Return Model \n\n Assume that Rayford Machining wants to know the internal rate of return for the new drill press. The drill press has an initial investment cost of $50,000 and an annual cash flow of $10,000 for each of the next seven years. The company expects a 7% rate of return on this type of investment. We calculate the present value factor as: \n\n Present Value Factor = $50,000 $10,000 = 5.000 Present Value Factor = $50,000 $10,000 = 5.000 \n\n Scanning the Present Value of an Ordinary Annuity table reveals that the interest rate where the present value factor is 5 and the number of periods is 7 is between 8 and 10%. Since the required rate of return was 7%, Rayford would consider investment in this metal press machine. \n\n Consider another example using Rayford, where they have two drill press purchase options. Option A has an IRR between 8% and 10%. The other option, Option B, has an initial investment cost of $60,500 and equal annual net cash flows of $13,256 for the next seven years. We calculate the present value factor as: \n\n Present Value Factor = $60,500 $13,256 = 4.564 (rounded) Present Value Factor = $60,500 $13,256 = 4.564 (rounded) \n\n Scanning the Present Value of an Ordinary Annuity table reveals that, when the present value factor is 4.564 and the number of periods is 7, the interest rate is 12%. This not only exceeds the 7% required rate, it also exceeds Option A’s return of 8% to 10%. Therefore, if resources were limited, Rayford would select Option B over Option A. \n\n Final Summary of the Discounted Cash Flow Models \n\n The internal rate of return (IRR) and the net present value (NPV) methods are types of discounted cash flow analysis that require taking estimated future payments from a project and discounting them into present values. The difference between the two methods is that the NPV calculation determines the project’s estimated return in dollars and the IRR provides the percentage rate of return from a project needed to break even. \n\n When the NPV is determined to be $0, the present value of the cash inflows and the present value of the cash outflows are equal. For example, assume that the present value of the cash inflows is $10,000 and the present value of the cash outflows is also $10,000. In this example, the NPV would be $0. At a net present value of zero, the IRR would be exactly equal to the interest rate that was used to perform the NPV calculation. For example, in the previous example, where both the cash inflows and the cash outflows have present values of $10,000 and the NPV is $0, assume that they were discounted at an 8% interest rate. If you were to then calculate the internal rate of return, the IRR would be 8%, the same interest rate that gave us an NPV of $0. \n\n Overall, it is important to understand that a company must consider the time value of money when making capital investment decisions. Knowing the present value of a future cash flow enables a company to better select between alternatives. The net present value compares the initial investment cost to the present value of future cash flows and requires a positive outcome before investment. The internal rate of return also considers the present value of future cash flows but considers profitability stated in terms of percentage of return on the investment or project. These models allows two or more options to be compared to eliminate bias with raw financial figures. \n\n Think It Through Choosing Investments Companies are presented with viable alternatives that sometimes produce nearly identical results and profitability goals. If they have the ability to invest in both alternatives, they may do so. But what about when resources are constrained? How do they choose which investment is best for their company? \n\n Consider this: you have two projects that met the payback period and accounting rate of return screenings identically. Project 1 produced an NPV of $45,000 and had an IRR between 5% and 8%. Project 2 produced a NPV of $35,000 and had an IRR of 10%. This leaves you with a difficult choice, since each alternative has a measurement that exceeds the other and the other variables are the same. Which project would you invest in and why? \n 11.5 Compare and Contrast Non-Time Value-Based Methods and Time Value-Based Methods in Capital Investment Decisions \n\n When an investment opportunity is presented to a company, there are many financial and non-financial factors to consider. Using capital budgeting methods to narrow down the choices by removing unviable alternatives is an important process for any successful business. The four methods for capital budgeting analysis—payback period, accounting rate of return, net present value, and internal rate of return—all have their strengths and weaknesses, which are discussed as follows. \n\n Summary of the Strengths and Weaknesses of the Non-Time Value-Based Capital Budgeting Methods \n\n Non-time value-based capital budgeting methods are best used in an initial screening process when there are many alternatives to choose from. Two such methods are payback method and accounting rate of return. Their strengths and weaknesses are discussed in Table 11.4 and Table 11.5 . \n\n The payback method determines the length of time needed to recoup an investment. \n\n Payback Method \n\n Strengths \n\n Weaknesses \n\n Simple calculation \n\n Screens out many unviable alternatives quickly \n\n Removes high-risk investments from consideration \n\n Does not consider time value of money \n\n Profitability of an investment is ignored \n\n Cash flows beyond investment return are not considered \n\n Table 11.4 \n\n Accounting rate of return measures incremental increases to net income. This method has several strengths and weaknesses that are similar to payback period but include a deeper evaluation of income. \n\n Accounting Rate of Return \n\n Strengths \n\n Weaknesses \n\n Simple calculation \n\n Screens out many unviable options quickly \n\n Considers the impact on income rather than cash flows only (profitability) \n\n Does not consider the time value of money \n\n Return rates for the entire lifespan of the investment is not considered \n\n External factors, such as inflation, are ignored \n\n Return rates override the risk of investment \n\n Table 11.5 \n\n Because of the limited information each of the non-time value-based methods give, they are typically used in conjunction with time value-based capital budgeting methods. \n\n Summary of the Strengths and Weaknesses of the Time Value-Based Capital Budgeting Methods \n\n Time value-based capital budgeting methods are best used after an initial screening process, when a company is choosing between few alternatives. They help determine the best of the alternatives that a company should pursue. Two such methods are net present value and internal rate of return. Their strengths and weaknesses are presented in Table 11.6 and Table 11.7 . \n\n Net present value converts future cash flow dollars into current values to determine if the initial investment is less than the future returns. \n\n Net Present Value \n\n Strengths \n\n Weaknesses \n\n Considers the time value of money \n\n Acknowledges higher risk investments \n\n Comparable future earnings with today's value \n\n Allows for a selection of investment \n\n Requires a more difficult calculation than non-time value methods \n\n Required return rate is an estimate, thus any changes to this condition and the impact that has on earnings are unknown \n\n Difficult to compare alternatives that have varying investment amounts \n\n Table 11.6 \n\n Internal rate of return looks at future cash flows as compared to an initial investment to find the rate of return on investment. The goal is to have an interest rate higher than the predetermined rate of return to consider investment. \n\n Internal Rate of Return \n\n Strengths \n\n Weaknesses \n\n Considers the time value of money \n\n Easy to compare different-sized investments, removes dollar bias \n\n A predetermined rate of return is not required \n\n Allows for a selection of investment \n\n Does not acknowledge higher risk investments because the focus is on return rates \n\n More difficult calculation than non-time value methods, and outcome may be uncertain if not using a financial calculator or spreadsheet program \n\n If the time for return on investment is important, IRR will not place more importance on shorter-term investments \n\n Table 11.7 \n\n After a time-value based capital budgeting method is analyzed, a company can be move toward a decision on an investment opportunity. This is of particular importance when resources are limited. \n\n Before discussing the mechanics of choosing the NPV versus the IRR method for decision-making, we first need to discuss one cardinal rule of using the NPV or IRR methods to evaluate time-sensitive investments or asset purchases: If a project or investment has a positive NPV, then it will, by definition, have an IRR that is above the interest rate used to calculate the NPV. \n\n For example, assume that a company is considering buying a piece of equipment. They determine that it will cost $30,000 and will save them $10,000 a year in expenses for five years. They have decided that the interest rate that they will choose to calculate the NPV and to evaluate the purchase IRR is 8%, predicated on current loan rates available. Based on this sample data, the NPV will be positive $9,927 ($39,927 PV for inflows and $30,000 PV for the outflows), and the IRR will be 19.86%. Since the calculations require at least an 8% return, the company would accept the project using either method. We will not spend additional time on the calculations at this point, since our purpose is to create numbers to analyze. If you want to duplicate the calculations, you can use a software program such as Excel or a financial calculator. \n\n Concepts In Practice Solar Energy as Capital Investment A recent capital investment decision that many company leaders need to make is whether or not to invest in solar energy. Solar energy is replacing fossil fuels as a power source, and it provides a low-cost energy, reducing overhead costs. The expensive up-front installation costs can deter some businesses from making the initial investment. \n\n Businesses must now choose between an expensive initial capital outlay and the long-term benefits of solar power. A capital investment such as this would require an initial screening and preference process to determine if the cost savings and future benefits are worth more today than the current capital expenditure. If it makes financial sense, they may look to invest in this increasingly popular energy source. \n\n Now, we return to our comparison of the NPV and IRR methods. There are typically two situations that we want to consider. The first involves looking at projects that are not mutually exclusive, meaning we can consider more than one possibility. If a company is considering non-mutually exclusive opportunities, they will generally consider all options that have a positive NPV or an IRR that is above the target rate of interest as favorable options for an investment or asset purchase. In this situation, the NPV and IRR methods will provide the same accept-or-reject decision. If the company accepts a project or investment under the NPV calculation, then they will accept it under the IRR method. If they reject it under the NPV calculation, then they will also reject under the IRR method. \n\n The second situation involves mutually exclusive opportunities. For example, if a company has one computer system and is considering replacing it, they might look at seven options that have favorable NPVs and IRRs, even though they only need one computer system. In this case, they would choose only one of the seven possible options. \n\n In the case of mutually exclusive options, it is possible that the NPV method will select Option A while the IRR method might choose Option D. The primary reason for this difference is that the NPV method uses dollars and the IRR uses an interest rate. The two methods may select different options if the company has investments with major differences in costs in terms of dollars. While both will identify an investment or purchase that exceeds the required standards of a positive NPV or an interest rate above the target interest rate, they might lead the company to choose different positive options. When this occurs, the company needs to consider other conditions, such as qualitative factors, to make their decision. Future cost accounting or finance courses will cover this content in more detail. \n\n Final Comparison of the Four Capital Budgeting Options \n\n A company will be presented with many alternatives for investment. It is up to management to analyze each investment’s possibilities using capital budgeting methods. The company will want to first screen each possibility with the payback method and accounting rate of return. The payback method will show the company how long it will take to recoup their investment, while accounting rate of return gives them the profitability of the alternatives. This screening will typically get rid of non-viable options and allow the company to further consider a select few alternatives. A more detailed analysis is found in time-value methods, such as net present value and internal rate of return. Net present value converts future cash flows into today’s valuation for comparability purposes to see if an initial outlay of cash is worth future earnings. The internal rate of return determines the minimum expected return on a project given the present value of cash flow expectations and the initial investment. Analyzing these opportunities, with consideration given to time value of money, allows a company to make an informed decision on how to make large capital expenditures. \n\n Ethical Considerations Barclays and the LIBOR Scandal As discussed in Volkswagen Diesel Emissions Scandal , when a company makes an unethical decision, it must adjust its budget for fines and lawsuits. In 2012, Barclays , a British financial services company, was caught illegally manipulating LIBOR interest rates. LIBOR sets the interest rate for many types of loans. As CNN reported, “LIBOR, which stands for London Interbank Offered Rate, is the rate at which banks lend to each other, and is used globally to price financial products, such as mortgages, worth hundreds of trillions of dollars.” 4 4 Charles Riley. “Remember the Libor Scandal? Well It's Coming Back to Haunt the Bank of England.” CNN. April 10, 2017. https://money.cnn.com/2017/04/10/investing/bank-of-england-libor-barclays/index.html \n\n While Volkswagen decided to cover the costs related to fines and lawsuits by reducing its capital budget for technology and research, Barclays took a different approach. The company chose to “cut or claw back of about 450 million pounds ($680 million) of pay from its staff” and from past pay packages “another 140 million pounds ($212 million).” 5 Instead of reducing other areas of its capital budget, Barclays decided to cover its fines and lawsuits by cutting employee compensation. 5 Steve Slater. “Barclays to Cut Pay by $890 Million over Scandals: Source.” Reuters. February 27, 2013. https://www.reuters.com/article/us-barclays-libor-pay/barclays-to-cut-pay-by-890-million-over-scandals-source-idUSBRE91Q0SD20130227 \n\n The LIBOR scandal involved a number of international banks and rocked the international banking community. An independent review of Barclays reported that “if Barclays is to achieve a material improvement in its reputation, it will need to continue to make changes to its top levels of pay so as to reflect talent and contribution more realistically, and in ways that mean something to the general public.” 6 Previously, as described by the company website, “Barclays has been a leader in innovation; funding the world’s first industrial steam railway, naming the UK’s first female branch manager and introducing the world’s first ATM machine.” 7 The positive reputation Barclays built over 300 years was tarnished by just one scandal, and demonstrates the difficulty of calculating just how much unethical behavior will cost a company’s reputation. 6 Anthony Salz. Salz Review: An Independent Review of Barclays’ Business Practices. April 3, 2018. https://online.wsj.com/public/resources/documents/SalzReview04032013.pdf 7 “Our History.” Barclays. n.d. https://www.banking.barclaysus.com/our-history.html \n\n Link to Learning \n\n A popular television show, Shark Tank , explores the decision-making process investors use when considering ownership in a new business. Entrepreneurs will pitch their business concept and current position to the “sharks,” who will evaluate the business using capital budgeting methods, such as payback period and net present value, to decide whether or not to invest in the entrepreneur’s company. Learn more about Shark Tank ’s concept and success stories on the web. "}}},{"rowIdx":75,"cells":{"bname":{"kind":"string","value":"biology"},"keyterm":{"kind":"string","value":""},"summary":{"kind":"string","value":""},"intro":{"kind":"string","value":" Chapter Outline 30.1 The Plant Body 30.2 Stems 30.3 Roots 30.4 Leaves 30.5 Transport of Water and Solutes in Plants 30.6 Plant Sensory Systems and Responses Introduction Plants are as essential to human existence as land, water, and air. Without plants, our day-to-day lives would be impossible because without oxygen from photosynthesis, aerobic life cannot be sustained. From providing food and shelter to serving as a source of medicines, oils, perfumes, and industrial products, plants provide humans with numerous valuable resources. When you think of plants, most of the organisms that come to mind are vascular plants. These plants have tissues that conduct food and water, and they have seeds. Seed plants are divided into gymnosperms and angiosperms. Gymnosperms include the needle-leaved conifers—spruce, fir, and pine—as well as less familiar plants, such as ginkgos and cycads. Their seeds are not enclosed by a fleshy fruit. Angiosperms, also called flowering plants, constitute the majority of seed plants. They include broadleaved trees (such as maple, oak, and elm), vegetables (such as potatoes, lettuce, and carrots), grasses, and plants known for the beauty of their flowers (roses, irises, and daffodils, for example). While individual plant species are unique, all share a common structure: a plant body consisting of stems, roots, and leaves. They all transport water, minerals, and sugars produced through photosynthesis through the plant body in a similar manner. All plant species also respond to environmental factors, such as light, gravity, competition, temperature, and predation. "},"questions":{"kind":"list like","value":[{"answer":{"ans_choice":2,"ans_text":"meristematic tissue"},"bloom":null,"hl_context":"Plants are multicellular eukaryotes with tissue systems made of various cell types that carry out specific functions . Plant tissue systems fall into one of two general types : meristematic tissue , and permanent ( or non-meristematic ) tissue . Cells of the meristematic tissue are found in meristems , which are plant regions of continuous cell division and growth . Meristematic tissue cells are either undifferentiated or incompletely differentiated , and they continue to divide and contribute to the growth of the plant . In contrast , permanent tissue consists of plant cells that are no longer actively dividing .","hl_sentences":"Plant tissue systems fall into one of two general types : meristematic tissue , and permanent ( or non-meristematic ) tissue . Cells of the meristematic tissue are found in meristems , which are plant regions of continuous cell division and growth .","question":{"cloze_format":"Plant regions of continuous growth are made up of ________.","normal_format":"What are plant regions of continuous growth made up of?","question_choices":["dermal tissue","vascular tissue","meristematic tissue","permanent tissue"],"question_id":"fs-idm152914064","question_text":"Plant regions of continuous growth are made up of ________."},"references_are_paraphrase":null},{"answer":{"ans_choice":1,"ans_text":"ground tissue"},"bloom":null,"hl_context":"Meristems produce cells that quickly differentiate , or specialize , and become permanent tissue . Such cells take on specific roles and lose their ability to divide further . They differentiate into three main types : dermal , vascular , and ground tissue . Dermal tissue covers and protects the plant , and vascular tissue transports water , minerals , and sugars to different parts of the plant . Ground tissue serves as a site for photosynthesis , provides a supporting matrix for the vascular tissue , and helps to store water and sugars . ","hl_sentences":"Ground tissue serves as a site for photosynthesis , provides a supporting matrix for the vascular tissue , and helps to store water and sugars .","question":{"cloze_format":"___ is the major site of photosynthesis.","normal_format":"Which of the following is the major site of photosynthesis?","question_choices":["apical meristem","ground tissue","xylem cells","phloem cells"],"question_id":"fs-idm166908656","question_text":"Which of the following is the major site of photosynthesis?"},"references_are_paraphrase":null},{"answer":{"ans_choice":2,"ans_text":"nodes"},"bloom":null,"hl_context":"Plant stems , whether above or below ground , are characterized by the presence of nodes and internodes ( Figure 30.4 ) . Nodes are points of attachment for leaves , aerial roots , and flowers . The stem region between two nodes is called an internode . The stalk that extends from the stem to the base of the leaf is the petiole . An axillary bud is usually found in the axil — the area between the base of a leaf and the stem — where it can give rise to a branch or a flower . The apex ( tip ) of the shoot contains the apical meristem within the apical bud .","hl_sentences":"Nodes are points of attachment for leaves , aerial roots , and flowers .","question":{"cloze_format":"Stem regions at which leaves are attached are called ________.","normal_format":"What stem regions at which leaves are attached are called?","question_choices":["trichomes","lenticels","nodes","internodes"],"question_id":"fs-idp20795584","question_text":"Stem regions at which leaves are attached are called ________."},"references_are_paraphrase":null},{"answer":{"ans_choice":3,"ans_text":"parenchyma cells"},"bloom":null,"hl_context":" Parenchyma cells are the most common plant cells ( Figure 30.5 ) . They are found in the stem , the root , the inside of the leaf , and the pulp of the fruit . Parenchyma cells are responsible for metabolic functions , such as photosynthesis , and they help repair and heal wounds . Some parenchyma cells also store starch .","hl_sentences":"Parenchyma cells are the most common plant cells ( Figure 30.5 ) . They are found in the stem , the root , the inside of the leaf , and the pulp of the fruit .","question":{"cloze_format":"The cell types that form most of the inside of a plant are the ___ .","normal_format":"Which of the following cell types forms most of the inside of a plant?","question_choices":["meristem cells","collenchyma cells","sclerenchyma cells","parenchyma cells"],"question_id":"fs-idp22443296","question_text":"Which of the following cell types forms most of the inside of a plant?"},"references_are_paraphrase":null},{"answer":{"ans_choice":0,"ans_text":"vascular tissue"},"bloom":null,"hl_context":"Secondary tissues are either simple ( composed of similar cell types ) or complex ( composed of different cell types ) . Dermal tissue , for example , is a simple tissue that covers the outer surface of the plant and controls gas exchange . Vascular tissue is an example of a complex tissue , and is made of two specialized conducting tissues : xylem and phloem . Xylem tissue transports water and nutrients from the roots to different parts of the plant , and includes three different cell types : vessel elements and tracheids ( both of which conduct water ) , and xylem parenchyma . Phloem tissue , which transports organic compounds from the site of photosynthesis to other parts of the plant , consists of four different cell types : sieve cells ( which conduct photosynthates ) , companion cells , phloem parenchyma , and phloem fibers . Unlike xylem conducting cells , phloem conducting cells are alive at maturity . The xylem and phloem always lie adjacent to each other ( Figure 30.3 ) . In stems , the xylem and the phloem form a structure called a vascular bundle ; in roots , this is termed the vascular stele or vascular cylinder . 30.2 Stems Learning Objectives By the end of this section , you will be able to :","hl_sentences":"Vascular tissue is an example of a complex tissue , and is made of two specialized conducting tissues : xylem and phloem . Xylem tissue transports water and nutrients from the roots to different parts of the plant , and includes three different cell types : vessel elements and tracheids ( both of which conduct water ) , and xylem parenchyma . Phloem tissue , which transports organic compounds from the site of photosynthesis to other parts of the plant , consists of four different cell types : sieve cells ( which conduct photosynthates ) , companion cells , phloem parenchyma , and phloem fibers .","question":{"cloze_format":"Tracheids, vessel elements, sieve-tube cells, and companion cells are components of ________.","normal_format":"Tracheids, vessel elements, sieve-tube cells, and companion cells are components of what?","question_choices":["vascular tissue","meristematic tissue","ground tissue","dermal tissue"],"question_id":"fs-idm7316720","question_text":"Tracheids, vessel elements, sieve-tube cells, and companion cells are components of ________."},"references_are_paraphrase":null},{"answer":{"ans_choice":2,"ans_text":"apical meristem"},"bloom":null,"hl_context":"Most primary growth occurs at the apices , or tips , of stems and roots . Primary growth is a result of rapidly dividing cells in the apical meristems at the shoot tip and root tip . Subsequent cell elongation also contributes to primary growth . The growth of shoots and roots during primary growth enables plants to continuously seek water ( roots ) or sunlight ( shoots ) .","hl_sentences":"Primary growth is a result of rapidly dividing cells in the apical meristems at the shoot tip and root tip .","question":{"cloze_format":"The primary growth of a plant is due to the action of the ________.","normal_format":"The primary growth of a plant is due to the action of which of the following?","question_choices":["lateral meristem","vascular cambium","apical meristem","cork cambium"],"question_id":"fs-idm83890816","question_text":"The primary growth of a plant is due to the action of the ________."},"references_are_paraphrase":null},{"answer":{"ans_choice":1,"ans_text":"increase in thickness or girth"},"bloom":null,"hl_context":"Growth in plants occurs as the stems and roots lengthen . Some plants , especially those that are woody , also increase in thickness during their life span . The increase in length of the shoot and the root is referred to as primary growth , and is the result of cell division in the shoot apical meristem . Secondary growth is characterized by an increase in thickness or girth of the plant , and is caused by cell division in the lateral meristem . Figure 30.10 shows the areas of primary and secondary growth in a plant . Herbaceous plants mostly undergo primary growth , with hardly any secondary growth or increase in thickness . Secondary growth or “ wood ” is noticeable in woody plants ; it occurs in some dicots , but occurs very rarely in monocots .","hl_sentences":"Secondary growth is characterized by an increase in thickness or girth of the plant , and is caused by cell division in the lateral meristem .","question":{"cloze_format":"___ is an example of secondary growth.","normal_format":"Which of the following is an example of secondary growth?","question_choices":["increase in length","increase in thickness or girth","increase in root hairs","increase in leaf number"],"question_id":"fs-idm38281984","question_text":"Which of the following is an example of secondary growth?"},"references_are_paraphrase":null},{"answer":{"ans_choice":1,"ans_text":"dicots"},"bloom":null,"hl_context":"Growth in plants occurs as the stems and roots lengthen . Some plants , especially those that are woody , also increase in thickness during their life span . The increase in length of the shoot and the root is referred to as primary growth , and is the result of cell division in the shoot apical meristem . Secondary growth is characterized by an increase in thickness or girth of the plant , and is caused by cell division in the lateral meristem . Figure 30.10 shows the areas of primary and secondary growth in a plant . Herbaceous plants mostly undergo primary growth , with hardly any secondary growth or increase in thickness . Secondary growth or “ wood ” is noticeable in woody plants ; it occurs in some dicots , but occurs very rarely in monocots . ","hl_sentences":"Secondary growth or “ wood ” is noticeable in woody plants ; it occurs in some dicots , but occurs very rarely in monocots .","question":{"cloze_format":"Secondary growth in stems is usually seen in ________.","normal_format":"Where is secondary growth in stems usually seen in?","question_choices":["monocots","dicots","both monocots and dicots","neither monocots nor dicots"],"question_id":"fs-idp54958096","question_text":"Secondary growth in stems is usually seen in ________."},"references_are_paraphrase":null},{"answer":{"ans_choice":0,"ans_text":"epiphytic roots"},"bloom":null,"hl_context":" Epiphytic roots enable a plant to grow on another plant . For example , the epiphytic roots of orchids develop a spongy tissue to absorb moisture . The banyan tree ( Ficus sp . ) begins as an epiphyte , germinating in the branches of a host tree ; aerial roots develop from the branches and eventually reach the ground , providing additional support ( Figure 30.20 ) . In screwpine ( Pandanus sp . ) , a palm-like tree that grows in sandy tropical soils , aboveground prop roots develop from the nodes to provide additional support . 30.4 Leaves Learning Objectives By the end of this section , you will be able to :","hl_sentences":"Epiphytic roots enable a plant to grow on another plant .","question":{"cloze_format":"Roots that enable a plant to grow on another plant are called ________.","normal_format":"What are roots that enable a plant to grow on another plant called?","question_choices":["epiphytic roots","prop roots","adventitious roots","aerial roots"],"question_id":"fs-idp60672","question_text":"Roots that enable a plant to grow on another plant are called ________."},"references_are_paraphrase":null},{"answer":{"ans_choice":2,"ans_text":"endodermis"},"bloom":null,"hl_context":"The vascular tissue in the root is arranged in the inner portion of the root , which is called the stele ( Figure 30.18 ) . A layer of cells known as the endodermis separates the stele from the ground tissue in the outer portion of the root . The endodermis is exclusive to roots , and serves as a checkpoint for materials entering the root ’ s vascular system . A waxy substance called suberin is present on the walls of the endodermal cells . This waxy region , known as the Casparian strip , forces water and solutes to cross the plasma membranes of endodermal cells instead of slipping between the cells . This ensures that only materials required by the root pass through the endodermis , while toxic substances and pathogens are generally excluded . The outermost cell layer of the root ’ s vascular tissue is the pericycle , an area that can give rise to lateral roots . In dicot roots , the xylem and phloem of the stele are arranged alternately in an X shape , whereas in monocot roots , the vascular tissue is arranged in a ring around the pith .","hl_sentences":"The endodermis is exclusive to roots , and serves as a checkpoint for materials entering the root ’ s vascular system . This ensures that only materials required by the root pass through the endodermis , while toxic substances and pathogens are generally excluded .","question":{"cloze_format":"The ________ forces selective uptake of minerals in the root.","normal_format":"What forces selective uptake of minerals in the root?","question_choices":["pericycle","epidermis","endodermis","root cap"],"question_id":"fs-idp89826256","question_text":"The ________ forces selective uptake of minerals in the root."},"references_are_paraphrase":null},{"answer":{"ans_choice":3,"ans_text":"zone of cell division"},"bloom":null,"hl_context":"Root growth begins with seed germination . When the plant embryo emerges from the seed , the radicle of the embryo forms the root system . The tip of the root is protected by the root cap , a structure exclusive to roots and unlike any other plant structure . The root cap is continuously replaced because it gets damaged easily as the root pushes through soil . The root tip can be divided into three zones : a zone of cell division , a zone of elongation , and a zone of maturation and differentiation ( Figure 30.16 ) . The zone of cell division is closest to the root tip ; it is made up of the actively dividing cells of the root meristem . The zone of elongation is where the newly formed cells increase in length , thereby lengthening the root . Beginning at the first root hair is the zone of cell maturation where the root cells begin to differentiate into special cell types . All three zones are in the first centimeter or so of the root tip .","hl_sentences":"The root tip can be divided into three zones : a zone of cell division , a zone of elongation , and a zone of maturation and differentiation ( Figure 30.16 ) . The zone of cell division is closest to the root tip ; it is made up of the actively dividing cells of the root meristem .","question":{"cloze_format":"Newly-formed root cells begin to form different cell types in the ________.","normal_format":"Where do newly-formed root cells begin to form different cell types?","question_choices":["zone of elongation","zone of maturation","root meristem","zone of cell division"],"question_id":"fs-idp3441920","question_text":"Newly-formed root cells begin to form different cell types in the ________."},"references_are_paraphrase":null},{"answer":{"ans_choice":0,"ans_text":"petiole"},"bloom":null,"hl_context":"Plant stems , whether above or below ground , are characterized by the presence of nodes and internodes ( Figure 30.4 ) . Nodes are points of attachment for leaves , aerial roots , and flowers . The stem region between two nodes is called an internode . The stalk that extends from the stem to the base of the leaf is the petiole . An axillary bud is usually found in the axil — the area between the base of a leaf and the stem — where it can give rise to a branch or a flower . The apex ( tip ) of the shoot contains the apical meristem within the apical bud .","hl_sentences":"The stalk that extends from the stem to the base of the leaf is the petiole .","question":{"cloze_format":"The stalk of a leaf is known as the ________.","normal_format":"What is the stalk of a leaf known as?","question_choices":["petiole","lamina","stipule","rachis"],"question_id":"fs-idp137709888","question_text":"The stalk of a leaf is known as the ________."},"references_are_paraphrase":null},{"answer":{"ans_choice":2,"ans_text":"compound"},"bloom":null,"hl_context":"Leaves may be simple or compound ( Figure 30.23 ) . In a simple leaf , the blade is either completely undivided — as in the banana leaf — or it has lobes , but the separation does not reach the midrib , as in the maple leaf . In a compound leaf , the leaf blade is completely divided , forming leaflets , as in the locust tree . Each leaflet may have its own stalk , but is attached to the rachis . A palmately compound leaf resembles the palm of a hand , with leaflets radiating outwards from one point Examples include the leaves of poison ivy , the buckeye tree , or the familiar houseplant Schefflera sp . ( common name “ umbrella plant ” ) . Pinnately compound leaves take their name from their feather-like appearance ; the leaflets are arranged along the midrib , as in rose leaves ( Rosa sp . ) , or the leaves of hickory , pecan , ash , or walnut trees .","hl_sentences":"In a compound leaf , the leaf blade is completely divided , forming leaflets , as in the locust tree .","question":{"cloze_format":"Leaflets are a characteristic of ________ leaves.","normal_format":"Leaflets are a characteristic of which leaves?","question_choices":["alternate","whorled","compound","opposite"],"question_id":"fs-idp85203904","question_text":"Leaflets are a characteristic of ________ leaves."},"references_are_paraphrase":null},{"answer":{"ans_choice":3,"ans_text":"mesophyll"},"bloom":null,"hl_context":"Below the epidermis of dicot leaves are layers of cells known as the mesophyll , or “ middle leaf . ” The mesophyll of most leaves typically contains two arrangements of parenchyma cells : the palisade parenchyma and spongy parenchyma ( Figure 30.26 ) . The palisade parenchyma ( also called the palisade mesophyll ) has column-shaped , tightly packed cells , and may be present in one , two , or three layers . Below the palisade parenchyma are loosely arranged cells of an irregular shape . These are the cells of the spongy parenchyma ( or spongy mesophyll ) . The air space found between the spongy parenchyma cells allows gaseous exchange between the leaf and the outside atmosphere through the stomata . In aquatic plants , the intercellular spaces in the spongy parenchyma help the leaf float . Both layers of the mesophyll contain many chloroplasts . Guard cells are the only epidermal cells to contain chloroplasts . Like the stem , the leaf contains vascular bundles composed of xylem and phloem ( Figure 30.27 ) . The xylem consists of tracheids and vessels , which transport water and minerals to the leaves . The phloem transports the photosynthetic products from the leaf to the other parts of the plant . A single vascular bundle , no matter how large or small , always contains both xylem and phloem tissues .","hl_sentences":"Both layers of the mesophyll contain many chloroplasts .","question":{"cloze_format":"Cells of the ________ contain chloroplasts.","normal_format":"Which cells contain chloroplasts?","question_choices":["epidermis","vascular tissue","stomata","mesophyll"],"question_id":"fs-idp28882000","question_text":"Cells of the ________ contain chloroplasts."},"references_are_paraphrase":null},{"answer":{"ans_choice":1,"ans_text":"spines instead of leaves"},"bloom":null,"hl_context":"Leaf Adaptations Coniferous plant species that thrive in cold environments , like spruce , fir , and pine , have leaves that are reduced in size and needle-like in appearance . These needle-like leaves have sunken stomata and a smaller surface area : two attributes that aid in reducing water loss . In hot climates , plants such as cacti have leaves that are reduced to spines , which in combination with their succulent stems , help to conserve water . Many aquatic plants have leaves with wide lamina that can float on the surface of the water , and a thick waxy cuticle on the leaf surface that repels water . Link to Learning","hl_sentences":"In hot climates , plants such as cacti have leaves that are reduced to spines , which in combination with their succulent stems , help to conserve water .","question":{"cloze_format":"___ is most likely to be found in a desert environment.","normal_format":"Which of the following is most likely to be found in a desert environment?","question_choices":["broad leaves to capture sunlight","spines instead of leaves","needle-like leaves","wide, flat leaves that can float"],"question_id":"fs-idm14688192","question_text":"Which of the following is most likely to be found in a desert environment?"},"references_are_paraphrase":null},{"answer":{"ans_choice":0,"ans_text":"Water vapor is lost to the external environment, increasing the rate of transpiration."},"bloom":null,"hl_context":"Leaves are covered by a waxy cuticle on the outer surface that prevents the loss of water . Regulation of transpiration , therefore , is achieved primarily through the opening and closing of stomata on the leaf surface . Stomata are surrounded by two specialized cells called guard cells , which open and close in response to environmental cues such as light intensity and quality , leaf water status , and carbon dioxide concentrations . Stomata must open to allow air containing carbon dioxide and oxygen to diffuse into the leaf for photosynthesis and respiration . When stomata are open , however , water vapor is lost to the external environment , increasing the rate of transpiration . Therefore , plants must maintain a balance between efficient photosynthesis and water loss .","hl_sentences":"When stomata are open , however , water vapor is lost to the external environment , increasing the rate of transpiration .","question":{"cloze_format":"When stomata open, it occurs that ___.","normal_format":"When stomata open, what occurs?","question_choices":["Water vapor is lost to the external environment, increasing the rate of transpiration.","Water vapor is lost to the external environment, decreasing the rate of transpiration.","Water vapor enters the spaces in the mesophyll, increasing the rate of transpiration.","Water vapor enters the spaces in the mesophyll, increasing the rate of transpiration."],"question_id":"fs-idm129887328","question_text":"When stomata open, what occurs?"},"references_are_paraphrase":null},{"answer":{"ans_choice":3,"ans_text":"sieve-tube elements, companion cells"},"bloom":null,"hl_context":"Photosynthates , such as sucrose , are produced in the mesophyll cells of photosynthesizing leaves . From there they are translocated through the phloem to where they are used or stored . Mesophyll cells are connected by cytoplasmic channels called plasmodesmata . Photosynthates move through these channels to reach phloem sieve-tube elements ( STEs ) in the vascular bundles . From the mesophyll cells , the photosynthates are loaded into the phloem STEs . The sucrose is actively transported against its concentration gradient ( a process requiring ATP ) into the phloem cells using the electrochemical potential of the proton gradient . This is coupled to the uptake of sucrose with a carrier protein called the sucrose-H + symporter . Phloem STEs have reduced cytoplasmic contents , and are connected by a sieve plate with pores that allow for pressure-driven bulk flow , or translocation , of phloem sap . Companion cells are associated with STEs . They assist with metabolic activities and produce energy for the STEs ( Figure 30.36 ) .","hl_sentences":"Photosynthates move through these channels to reach phloem sieve-tube elements ( STEs ) in the vascular bundles .","question":{"cloze_format":"The cells ___ are responsible for the movement of photosynthates through a plant.","normal_format":"Which cells are responsible for the movement of photosynthates through a plant?","question_choices":["tracheids, vessel elements","tracheids, companion cells","vessel elements, companion cells","sieve-tube elements, companion cells"],"question_id":"fs-idm12618624","question_text":"Which cells are responsible for the movement of photosynthates through a plant?"},"references_are_paraphrase":null},{"answer":{"ans_choice":2,"ans_text":"phototropin"},"bloom":null,"hl_context":" The aptly-named phototropins are protein-based receptors responsible for mediating the phototropic response . Like all plant photoreceptors , phototropins consist of a protein portion and a light-absorbing portion , called the chromophore . In phototropins , the chromophore is a covalently-bound molecule of flavin ; hence , phototropins belong to a class of proteins called flavoproteins .","hl_sentences":"The aptly-named phototropins are protein-based receptors responsible for mediating the phototropic response .","question":{"cloze_format":"The main photoreceptor that triggers phototropism is a ________.","normal_format":"What is the main photoreceptor that triggers phototropism?","question_choices":["phytochrome","cryptochrome","phototropin","carotenoid"],"question_id":"fs-idp103337616","question_text":"The main photoreceptor that triggers phototropism is a ________."},"references_are_paraphrase":null},{"answer":{"ans_choice":2,"ans_text":"mediates morphological changes in response to red and far-red light"},"bloom":null,"hl_context":"The phytochromes are a family of chromoproteins with a linear tetrapyrrole chromophore , similar to the ringed tetrapyrrole light-absorbing head group of chlorophyll . Phytochromes have two photo-interconvertible forms : Pr and Pfr . Pr absorbs red light ( ~ 667 nm ) and is immediately converted to Pfr . Pfr absorbs far-red light ( ~ 730 nm ) and is quickly converted back to Pr . Absorption of red or far-red light causes a massive change to the shape of the chromophore , altering the conformation and activity of the phytochrome protein to which it is bound . Pfr is the physiologically active form of the protein ; therefore , exposure to red light yields physiological activity . Exposure to far-red light inhibits phytochrome activity . Together , the two forms represent the phytochrome system ( Figure 30.38 ) .","hl_sentences":"Phytochromes have two photo-interconvertible forms : Pr and Pfr . Pr absorbs red light ( ~ 667 nm ) and is immediately converted to Pfr . Absorption of red or far-red light causes a massive change to the shape of the chromophore , altering the conformation and activity of the phytochrome protein to which it is bound .","question":{"cloze_format":"Phytochrome is a plant pigment protein that ___.","normal_format":"What is Phytochrome, a plant pigment protein?","question_choices":["mediates plant infection","promotes plant growth","mediates morphological changes in response to red and far-red light","inhibits plant growth"],"question_id":"fs-idp154368896","question_text":"Phytochrome is a plant pigment protein that:"},"references_are_paraphrase":null},{"answer":{"ans_choice":1,"ans_text":"amyloplast"},"bloom":null,"hl_context":" Amyloplasts ( also known as statoliths ) are specialized plastids that contain starch granules and settle downward in response to gravity . Amyloplasts are found in shoots and in specialized cells of the root cap . When a plant is tilted , the statoliths drop to the new bottom cell wall . A few hours later , the shoot or root will show growth in the new vertical direction .","hl_sentences":"Amyloplasts ( also known as statoliths ) are specialized plastids that contain starch granules and settle downward in response to gravity .","question":{"cloze_format":"A mutant plant has roots that grow in all directions. The organelle that you would expect to be missing in the cell is ___.","normal_format":"A mutant plant has roots that grow in all directions. Which of the following organelles would you expect to be missing in the cell?","question_choices":["mitochondria","amyloplast","chloroplast","nucleus"],"question_id":"fs-idm61790704","question_text":"A mutant plant has roots that grow in all directions. Which of the following organelles would you expect to be missing in the cell?"},"references_are_paraphrase":null},{"answer":{"ans_choice":2,"ans_text":"ethylene"},"bloom":null,"hl_context":" Aging tissues ( especially senescing leaves ) and nodes of stems produce ethylene . The best-known effect of the hormone , however , is the promotion of fruit ripening . Ethylene stimulates the conversion of starch and acids to sugars . Some people store unripe fruit , such as avocadoes , in a sealed paper bag to accelerate ripening ; the gas released by the first fruit to mature will speed up the maturation of the remaining fruit . Ethylene also triggers leaf and fruit abscission , flower fading and dropping , and promotes germination in some cereals and sprouting of bulbs and potatoes .","hl_sentences":"Aging tissues ( especially senescing leaves ) and nodes of stems produce ethylene . The best-known effect of the hormone , however , is the promotion of fruit ripening . Some people store unripe fruit , such as avocadoes , in a sealed paper bag to accelerate ripening ; the gas released by the first fruit to mature will speed up the maturation of the remaining fruit .","question":{"cloze_format":"After buying green bananas or unripe avocadoes, they can be kept in a brown bag to ripen. The hormone released by the fruit and trapped in the bag is probably ___.","normal_format":"After buying green bananas or unripe avocadoes, they can be kept in a brown bag to ripen. What is the hormone that released by the fruit and trapped in the bag?","question_choices":["abscisic acid","cytokinin","ethylene","gibberellic acid"],"question_id":"fs-idm41201088","question_text":"After buying green bananas or unripe avocadoes, they can be kept in a brown bag to ripen. The hormone released by the fruit and trapped in the bag is probably:"},"references_are_paraphrase":null},{"answer":{"ans_choice":0,"ans_text":"abscisic acid"},"bloom":null,"hl_context":" The plant hormone abscisic acid ( ABA ) was first discovered as the agent that causes the abscission or dropping of cotton bolls . However , more recent studies indicate that ABA plays only a minor role in the abscission process . ABA accumulates as a response to stressful environmental conditions , such as dehydration , cold temperatures , or shortened day lengths . Its activity counters many of the growth-promoting effects of GAs and auxins . ABA inhibits stem elongation and induces dormancy in lateral buds . ","hl_sentences":"The plant hormone abscisic acid ( ABA ) was first discovered as the agent that causes the abscission or dropping of cotton bolls . ABA inhibits stem elongation and induces dormancy in lateral buds .","question":{"cloze_format":"A decrease in the level of ___ releases seeds from dormancy.","normal_format":"A decrease in the level of which hormone releases seeds from dormancy?","question_choices":["abscisic acid","cytokinin","ethylene","gibberellic acid"],"question_id":"fs-idp149917488","question_text":"A decrease in the level of which hormone releases seeds from dormancy?"},"references_are_paraphrase":null},{"answer":{"ans_choice":2,"ans_text":"thigmotropism"},"bloom":null,"hl_context":" The movement of a plant subjected to constant directional pressure is called thigmotropism , from the Greek words thigma meaning “ touch , ” and tropism implying “ direction . ” Tendrils are one example of this . The meristematic region of tendrils is very touch sensitive ; light touch will evoke a quick coiling response . Cells in contact with a support surface contract , whereas cells on the opposite side of the support expand ( Figure 30.14 ) . Application of jasmonic acid is sufficient to trigger tendril coiling without a mechanical stimulus . A thigmonastic response is a touch response independent of the direction of stimulus Figure 30.24 . In the Venus flytrap , two modified leaves are joined at a hinge and lined with thin fork-like tines along the outer edges . Tiny hairs are located inside the trap . When an insect brushes against these trigger hairs , touching two or more of them in succession , the leaves close quickly , trapping the prey . Glands on the leaf surface secrete enzymes that slowly digest the insect . The released nutrients are absorbed by the leaves , which reopen for the next meal . Thigmomorphogenesis is a slow developmental change in the shape of a plant subjected to continuous mechanical stress . When trees bend in the wind , for example , growth is usually stunted and the trunk thickens . Strengthening tissue , especially xylem , is produced to add stiffness to resist the wind ’ s force . Researchers hypothesize that mechanical strain induces growth and differentiation to strengthen the tissues . Ethylene and jasmonate are likely involved in thigmomorphogenesis .","hl_sentences":"The movement of a plant subjected to constant directional pressure is called thigmotropism , from the Greek words thigma meaning “ touch , ” and tropism implying “ direction . ” Tendrils are one example of this . Cells in contact with a support surface contract , whereas cells on the opposite side of the support expand ( Figure 30.14 ) .","question":{"cloze_format":"A seedling germinating under a stone grows at an angle away from the stone and upward. This response to touch is called ________.","normal_format":"A seedling germinating under a stone grows at an angle away from the stone and upward. What is this response to touch called?","question_choices":["gravitropism","thigmonasty","thigmotropism","skototropism"],"question_id":"fs-idp109014384","question_text":"A seedling germinating under a stone grows at an angle away from the stone and upward. This response to touch is called ________."},"references_are_paraphrase":null}],"string":"[\n {\n \"answer\": {\n \"ans_choice\": 2,\n \"ans_text\": \"meristematic tissue\"\n },\n \"bloom\": null,\n \"hl_context\": \"Plants are multicellular eukaryotes with tissue systems made of various cell types that carry out specific functions . Plant tissue systems fall into one of two general types : meristematic tissue , and permanent ( or non-meristematic ) tissue . Cells of the meristematic tissue are found in meristems , which are plant regions of continuous cell division and growth . Meristematic tissue cells are either undifferentiated or incompletely differentiated , and they continue to divide and contribute to the growth of the plant . In contrast , permanent tissue consists of plant cells that are no longer actively dividing .\",\n \"hl_sentences\": \"Plant tissue systems fall into one of two general types : meristematic tissue , and permanent ( or non-meristematic ) tissue . Cells of the meristematic tissue are found in meristems , which are plant regions of continuous cell division and growth .\",\n \"question\": {\n \"cloze_format\": \"Plant regions of continuous growth are made up of ________.\",\n \"normal_format\": \"What are plant regions of continuous growth made up of?\",\n \"question_choices\": [\n \"dermal tissue\",\n \"vascular tissue\",\n \"meristematic tissue\",\n \"permanent tissue\"\n ],\n \"question_id\": \"fs-idm152914064\",\n \"question_text\": \"Plant regions of continuous growth are made up of ________.\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 1,\n \"ans_text\": \"ground tissue\"\n },\n \"bloom\": null,\n \"hl_context\": \"Meristems produce cells that quickly differentiate , or specialize , and become permanent tissue . Such cells take on specific roles and lose their ability to divide further . They differentiate into three main types : dermal , vascular , and ground tissue . Dermal tissue covers and protects the plant , and vascular tissue transports water , minerals , and sugars to different parts of the plant . Ground tissue serves as a site for photosynthesis , provides a supporting matrix for the vascular tissue , and helps to store water and sugars . \",\n \"hl_sentences\": \"Ground tissue serves as a site for photosynthesis , provides a supporting matrix for the vascular tissue , and helps to store water and sugars .\",\n \"question\": {\n \"cloze_format\": \"___ is the major site of photosynthesis.\",\n \"normal_format\": \"Which of the following is the major site of photosynthesis?\",\n \"question_choices\": [\n \"apical meristem\",\n \"ground tissue\",\n \"xylem cells\",\n \"phloem cells\"\n ],\n \"question_id\": \"fs-idm166908656\",\n \"question_text\": \"Which of the following is the major site of photosynthesis?\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 2,\n \"ans_text\": \"nodes\"\n },\n \"bloom\": null,\n \"hl_context\": \"Plant stems , whether above or below ground , are characterized by the presence of nodes and internodes ( Figure 30.4 ) . Nodes are points of attachment for leaves , aerial roots , and flowers . The stem region between two nodes is called an internode . The stalk that extends from the stem to the base of the leaf is the petiole . An axillary bud is usually found in the axil — the area between the base of a leaf and the stem — where it can give rise to a branch or a flower . The apex ( tip ) of the shoot contains the apical meristem within the apical bud .\",\n \"hl_sentences\": \"Nodes are points of attachment for leaves , aerial roots , and flowers .\",\n \"question\": {\n \"cloze_format\": \"Stem regions at which leaves are attached are called ________.\",\n \"normal_format\": \"What stem regions at which leaves are attached are called?\",\n \"question_choices\": [\n \"trichomes\",\n \"lenticels\",\n \"nodes\",\n \"internodes\"\n ],\n \"question_id\": \"fs-idp20795584\",\n \"question_text\": \"Stem regions at which leaves are attached are called ________.\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 3,\n \"ans_text\": \"parenchyma cells\"\n },\n \"bloom\": null,\n \"hl_context\": \" Parenchyma cells are the most common plant cells ( Figure 30.5 ) . They are found in the stem , the root , the inside of the leaf , and the pulp of the fruit . Parenchyma cells are responsible for metabolic functions , such as photosynthesis , and they help repair and heal wounds . Some parenchyma cells also store starch .\",\n \"hl_sentences\": \"Parenchyma cells are the most common plant cells ( Figure 30.5 ) . They are found in the stem , the root , the inside of the leaf , and the pulp of the fruit .\",\n \"question\": {\n \"cloze_format\": \"The cell types that form most of the inside of a plant are the ___ .\",\n \"normal_format\": \"Which of the following cell types forms most of the inside of a plant?\",\n \"question_choices\": [\n \"meristem cells\",\n \"collenchyma cells\",\n \"sclerenchyma cells\",\n \"parenchyma cells\"\n ],\n \"question_id\": \"fs-idp22443296\",\n \"question_text\": \"Which of the following cell types forms most of the inside of a plant?\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 0,\n \"ans_text\": \"vascular tissue\"\n },\n \"bloom\": null,\n \"hl_context\": \"Secondary tissues are either simple ( composed of similar cell types ) or complex ( composed of different cell types ) . Dermal tissue , for example , is a simple tissue that covers the outer surface of the plant and controls gas exchange . Vascular tissue is an example of a complex tissue , and is made of two specialized conducting tissues : xylem and phloem . Xylem tissue transports water and nutrients from the roots to different parts of the plant , and includes three different cell types : vessel elements and tracheids ( both of which conduct water ) , and xylem parenchyma . Phloem tissue , which transports organic compounds from the site of photosynthesis to other parts of the plant , consists of four different cell types : sieve cells ( which conduct photosynthates ) , companion cells , phloem parenchyma , and phloem fibers . Unlike xylem conducting cells , phloem conducting cells are alive at maturity . The xylem and phloem always lie adjacent to each other ( Figure 30.3 ) . In stems , the xylem and the phloem form a structure called a vascular bundle ; in roots , this is termed the vascular stele or vascular cylinder . 30.2 Stems Learning Objectives By the end of this section , you will be able to :\",\n \"hl_sentences\": \"Vascular tissue is an example of a complex tissue , and is made of two specialized conducting tissues : xylem and phloem . Xylem tissue transports water and nutrients from the roots to different parts of the plant , and includes three different cell types : vessel elements and tracheids ( both of which conduct water ) , and xylem parenchyma . Phloem tissue , which transports organic compounds from the site of photosynthesis to other parts of the plant , consists of four different cell types : sieve cells ( which conduct photosynthates ) , companion cells , phloem parenchyma , and phloem fibers .\",\n \"question\": {\n \"cloze_format\": \"Tracheids, vessel elements, sieve-tube cells, and companion cells are components of ________.\",\n \"normal_format\": \"Tracheids, vessel elements, sieve-tube cells, and companion cells are components of what?\",\n \"question_choices\": [\n \"vascular tissue\",\n \"meristematic tissue\",\n \"ground tissue\",\n \"dermal tissue\"\n ],\n \"question_id\": \"fs-idm7316720\",\n \"question_text\": \"Tracheids, vessel elements, sieve-tube cells, and companion cells are components of ________.\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 2,\n \"ans_text\": \"apical meristem\"\n },\n \"bloom\": null,\n \"hl_context\": \"Most primary growth occurs at the apices , or tips , of stems and roots . Primary growth is a result of rapidly dividing cells in the apical meristems at the shoot tip and root tip . Subsequent cell elongation also contributes to primary growth . The growth of shoots and roots during primary growth enables plants to continuously seek water ( roots ) or sunlight ( shoots ) .\",\n \"hl_sentences\": \"Primary growth is a result of rapidly dividing cells in the apical meristems at the shoot tip and root tip .\",\n \"question\": {\n \"cloze_format\": \"The primary growth of a plant is due to the action of the ________.\",\n \"normal_format\": \"The primary growth of a plant is due to the action of which of the following?\",\n \"question_choices\": [\n \"lateral meristem\",\n \"vascular cambium\",\n \"apical meristem\",\n \"cork cambium\"\n ],\n \"question_id\": \"fs-idm83890816\",\n \"question_text\": \"The primary growth of a plant is due to the action of the ________.\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 1,\n \"ans_text\": \"increase in thickness or girth\"\n },\n \"bloom\": null,\n \"hl_context\": \"Growth in plants occurs as the stems and roots lengthen . Some plants , especially those that are woody , also increase in thickness during their life span . The increase in length of the shoot and the root is referred to as primary growth , and is the result of cell division in the shoot apical meristem . Secondary growth is characterized by an increase in thickness or girth of the plant , and is caused by cell division in the lateral meristem . Figure 30.10 shows the areas of primary and secondary growth in a plant . Herbaceous plants mostly undergo primary growth , with hardly any secondary growth or increase in thickness . Secondary growth or “ wood ” is noticeable in woody plants ; it occurs in some dicots , but occurs very rarely in monocots .\",\n \"hl_sentences\": \"Secondary growth is characterized by an increase in thickness or girth of the plant , and is caused by cell division in the lateral meristem .\",\n \"question\": {\n \"cloze_format\": \"___ is an example of secondary growth.\",\n \"normal_format\": \"Which of the following is an example of secondary growth?\",\n \"question_choices\": [\n \"increase in length\",\n \"increase in thickness or girth\",\n \"increase in root hairs\",\n \"increase in leaf number\"\n ],\n \"question_id\": \"fs-idm38281984\",\n \"question_text\": \"Which of the following is an example of secondary growth?\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 1,\n \"ans_text\": \"dicots\"\n },\n \"bloom\": null,\n \"hl_context\": \"Growth in plants occurs as the stems and roots lengthen . Some plants , especially those that are woody , also increase in thickness during their life span . The increase in length of the shoot and the root is referred to as primary growth , and is the result of cell division in the shoot apical meristem . Secondary growth is characterized by an increase in thickness or girth of the plant , and is caused by cell division in the lateral meristem . Figure 30.10 shows the areas of primary and secondary growth in a plant . Herbaceous plants mostly undergo primary growth , with hardly any secondary growth or increase in thickness . Secondary growth or “ wood ” is noticeable in woody plants ; it occurs in some dicots , but occurs very rarely in monocots . \",\n \"hl_sentences\": \"Secondary growth or “ wood ” is noticeable in woody plants ; it occurs in some dicots , but occurs very rarely in monocots .\",\n \"question\": {\n \"cloze_format\": \"Secondary growth in stems is usually seen in ________.\",\n \"normal_format\": \"Where is secondary growth in stems usually seen in?\",\n \"question_choices\": [\n \"monocots\",\n \"dicots\",\n \"both monocots and dicots\",\n \"neither monocots nor dicots\"\n ],\n \"question_id\": \"fs-idp54958096\",\n \"question_text\": \"Secondary growth in stems is usually seen in ________.\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 0,\n \"ans_text\": \"epiphytic roots\"\n },\n \"bloom\": null,\n \"hl_context\": \" Epiphytic roots enable a plant to grow on another plant . For example , the epiphytic roots of orchids develop a spongy tissue to absorb moisture . The banyan tree ( Ficus sp . ) begins as an epiphyte , germinating in the branches of a host tree ; aerial roots develop from the branches and eventually reach the ground , providing additional support ( Figure 30.20 ) . In screwpine ( Pandanus sp . ) , a palm-like tree that grows in sandy tropical soils , aboveground prop roots develop from the nodes to provide additional support . 30.4 Leaves Learning Objectives By the end of this section , you will be able to :\",\n \"hl_sentences\": \"Epiphytic roots enable a plant to grow on another plant .\",\n \"question\": {\n \"cloze_format\": \"Roots that enable a plant to grow on another plant are called ________.\",\n \"normal_format\": \"What are roots that enable a plant to grow on another plant called?\",\n \"question_choices\": [\n \"epiphytic roots\",\n \"prop roots\",\n \"adventitious roots\",\n \"aerial roots\"\n ],\n \"question_id\": \"fs-idp60672\",\n \"question_text\": \"Roots that enable a plant to grow on another plant are called ________.\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 2,\n \"ans_text\": \"endodermis\"\n },\n \"bloom\": null,\n \"hl_context\": \"The vascular tissue in the root is arranged in the inner portion of the root , which is called the stele ( Figure 30.18 ) . A layer of cells known as the endodermis separates the stele from the ground tissue in the outer portion of the root . The endodermis is exclusive to roots , and serves as a checkpoint for materials entering the root ’ s vascular system . A waxy substance called suberin is present on the walls of the endodermal cells . This waxy region , known as the Casparian strip , forces water and solutes to cross the plasma membranes of endodermal cells instead of slipping between the cells . This ensures that only materials required by the root pass through the endodermis , while toxic substances and pathogens are generally excluded . The outermost cell layer of the root ’ s vascular tissue is the pericycle , an area that can give rise to lateral roots . In dicot roots , the xylem and phloem of the stele are arranged alternately in an X shape , whereas in monocot roots , the vascular tissue is arranged in a ring around the pith .\",\n \"hl_sentences\": \"The endodermis is exclusive to roots , and serves as a checkpoint for materials entering the root ’ s vascular system . This ensures that only materials required by the root pass through the endodermis , while toxic substances and pathogens are generally excluded .\",\n \"question\": {\n \"cloze_format\": \"The ________ forces selective uptake of minerals in the root.\",\n \"normal_format\": \"What forces selective uptake of minerals in the root?\",\n \"question_choices\": [\n \"pericycle\",\n \"epidermis\",\n \"endodermis\",\n \"root cap\"\n ],\n \"question_id\": \"fs-idp89826256\",\n \"question_text\": \"The ________ forces selective uptake of minerals in the root.\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 3,\n \"ans_text\": \"zone of cell division\"\n },\n \"bloom\": null,\n \"hl_context\": \"Root growth begins with seed germination . When the plant embryo emerges from the seed , the radicle of the embryo forms the root system . The tip of the root is protected by the root cap , a structure exclusive to roots and unlike any other plant structure . The root cap is continuously replaced because it gets damaged easily as the root pushes through soil . The root tip can be divided into three zones : a zone of cell division , a zone of elongation , and a zone of maturation and differentiation ( Figure 30.16 ) . The zone of cell division is closest to the root tip ; it is made up of the actively dividing cells of the root meristem . The zone of elongation is where the newly formed cells increase in length , thereby lengthening the root . Beginning at the first root hair is the zone of cell maturation where the root cells begin to differentiate into special cell types . All three zones are in the first centimeter or so of the root tip .\",\n \"hl_sentences\": \"The root tip can be divided into three zones : a zone of cell division , a zone of elongation , and a zone of maturation and differentiation ( Figure 30.16 ) . The zone of cell division is closest to the root tip ; it is made up of the actively dividing cells of the root meristem .\",\n \"question\": {\n \"cloze_format\": \"Newly-formed root cells begin to form different cell types in the ________.\",\n \"normal_format\": \"Where do newly-formed root cells begin to form different cell types?\",\n \"question_choices\": [\n \"zone of elongation\",\n \"zone of maturation\",\n \"root meristem\",\n \"zone of cell division\"\n ],\n \"question_id\": \"fs-idp3441920\",\n \"question_text\": \"Newly-formed root cells begin to form different cell types in the ________.\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 0,\n \"ans_text\": \"petiole\"\n },\n \"bloom\": null,\n \"hl_context\": \"Plant stems , whether above or below ground , are characterized by the presence of nodes and internodes ( Figure 30.4 ) . Nodes are points of attachment for leaves , aerial roots , and flowers . The stem region between two nodes is called an internode . The stalk that extends from the stem to the base of the leaf is the petiole . An axillary bud is usually found in the axil — the area between the base of a leaf and the stem — where it can give rise to a branch or a flower . The apex ( tip ) of the shoot contains the apical meristem within the apical bud .\",\n \"hl_sentences\": \"The stalk that extends from the stem to the base of the leaf is the petiole .\",\n \"question\": {\n \"cloze_format\": \"The stalk of a leaf is known as the ________.\",\n \"normal_format\": \"What is the stalk of a leaf known as?\",\n \"question_choices\": [\n \"petiole\",\n \"lamina\",\n \"stipule\",\n \"rachis\"\n ],\n \"question_id\": \"fs-idp137709888\",\n \"question_text\": \"The stalk of a leaf is known as the ________.\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 2,\n \"ans_text\": \"compound\"\n },\n \"bloom\": null,\n \"hl_context\": \"Leaves may be simple or compound ( Figure 30.23 ) . In a simple leaf , the blade is either completely undivided — as in the banana leaf — or it has lobes , but the separation does not reach the midrib , as in the maple leaf . In a compound leaf , the leaf blade is completely divided , forming leaflets , as in the locust tree . Each leaflet may have its own stalk , but is attached to the rachis . A palmately compound leaf resembles the palm of a hand , with leaflets radiating outwards from one point Examples include the leaves of poison ivy , the buckeye tree , or the familiar houseplant Schefflera sp . ( common name “ umbrella plant ” ) . Pinnately compound leaves take their name from their feather-like appearance ; the leaflets are arranged along the midrib , as in rose leaves ( Rosa sp . ) , or the leaves of hickory , pecan , ash , or walnut trees .\",\n \"hl_sentences\": \"In a compound leaf , the leaf blade is completely divided , forming leaflets , as in the locust tree .\",\n \"question\": {\n \"cloze_format\": \"Leaflets are a characteristic of ________ leaves.\",\n \"normal_format\": \"Leaflets are a characteristic of which leaves?\",\n \"question_choices\": [\n \"alternate\",\n \"whorled\",\n \"compound\",\n \"opposite\"\n ],\n \"question_id\": \"fs-idp85203904\",\n \"question_text\": \"Leaflets are a characteristic of ________ leaves.\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 3,\n \"ans_text\": \"mesophyll\"\n },\n \"bloom\": null,\n \"hl_context\": \"Below the epidermis of dicot leaves are layers of cells known as the mesophyll , or “ middle leaf . ” The mesophyll of most leaves typically contains two arrangements of parenchyma cells : the palisade parenchyma and spongy parenchyma ( Figure 30.26 ) . The palisade parenchyma ( also called the palisade mesophyll ) has column-shaped , tightly packed cells , and may be present in one , two , or three layers . Below the palisade parenchyma are loosely arranged cells of an irregular shape . These are the cells of the spongy parenchyma ( or spongy mesophyll ) . The air space found between the spongy parenchyma cells allows gaseous exchange between the leaf and the outside atmosphere through the stomata . In aquatic plants , the intercellular spaces in the spongy parenchyma help the leaf float . Both layers of the mesophyll contain many chloroplasts . Guard cells are the only epidermal cells to contain chloroplasts . Like the stem , the leaf contains vascular bundles composed of xylem and phloem ( Figure 30.27 ) . The xylem consists of tracheids and vessels , which transport water and minerals to the leaves . The phloem transports the photosynthetic products from the leaf to the other parts of the plant . A single vascular bundle , no matter how large or small , always contains both xylem and phloem tissues .\",\n \"hl_sentences\": \"Both layers of the mesophyll contain many chloroplasts .\",\n \"question\": {\n \"cloze_format\": \"Cells of the ________ contain chloroplasts.\",\n \"normal_format\": \"Which cells contain chloroplasts?\",\n \"question_choices\": [\n \"epidermis\",\n \"vascular tissue\",\n \"stomata\",\n \"mesophyll\"\n ],\n \"question_id\": \"fs-idp28882000\",\n \"question_text\": \"Cells of the ________ contain chloroplasts.\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 1,\n \"ans_text\": \"spines instead of leaves\"\n },\n \"bloom\": null,\n \"hl_context\": \"Leaf Adaptations Coniferous plant species that thrive in cold environments , like spruce , fir , and pine , have leaves that are reduced in size and needle-like in appearance . These needle-like leaves have sunken stomata and a smaller surface area : two attributes that aid in reducing water loss . In hot climates , plants such as cacti have leaves that are reduced to spines , which in combination with their succulent stems , help to conserve water . Many aquatic plants have leaves with wide lamina that can float on the surface of the water , and a thick waxy cuticle on the leaf surface that repels water . Link to Learning\",\n \"hl_sentences\": \"In hot climates , plants such as cacti have leaves that are reduced to spines , which in combination with their succulent stems , help to conserve water .\",\n \"question\": {\n \"cloze_format\": \"___ is most likely to be found in a desert environment.\",\n \"normal_format\": \"Which of the following is most likely to be found in a desert environment?\",\n \"question_choices\": [\n \"broad leaves to capture sunlight\",\n \"spines instead of leaves\",\n \"needle-like leaves\",\n \"wide, flat leaves that can float\"\n ],\n \"question_id\": \"fs-idm14688192\",\n \"question_text\": \"Which of the following is most likely to be found in a desert environment?\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 0,\n \"ans_text\": \"Water vapor is lost to the external environment, increasing the rate of transpiration.\"\n },\n \"bloom\": null,\n \"hl_context\": \"Leaves are covered by a waxy cuticle on the outer surface that prevents the loss of water . Regulation of transpiration , therefore , is achieved primarily through the opening and closing of stomata on the leaf surface . Stomata are surrounded by two specialized cells called guard cells , which open and close in response to environmental cues such as light intensity and quality , leaf water status , and carbon dioxide concentrations . Stomata must open to allow air containing carbon dioxide and oxygen to diffuse into the leaf for photosynthesis and respiration . When stomata are open , however , water vapor is lost to the external environment , increasing the rate of transpiration . Therefore , plants must maintain a balance between efficient photosynthesis and water loss .\",\n \"hl_sentences\": \"When stomata are open , however , water vapor is lost to the external environment , increasing the rate of transpiration .\",\n \"question\": {\n \"cloze_format\": \"When stomata open, it occurs that ___.\",\n \"normal_format\": \"When stomata open, what occurs?\",\n \"question_choices\": [\n \"Water vapor is lost to the external environment, increasing the rate of transpiration.\",\n \"Water vapor is lost to the external environment, decreasing the rate of transpiration.\",\n \"Water vapor enters the spaces in the mesophyll, increasing the rate of transpiration.\",\n \"Water vapor enters the spaces in the mesophyll, increasing the rate of transpiration.\"\n ],\n \"question_id\": \"fs-idm129887328\",\n \"question_text\": \"When stomata open, what occurs?\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 3,\n \"ans_text\": \"sieve-tube elements, companion cells\"\n },\n \"bloom\": null,\n \"hl_context\": \"Photosynthates , such as sucrose , are produced in the mesophyll cells of photosynthesizing leaves . From there they are translocated through the phloem to where they are used or stored . Mesophyll cells are connected by cytoplasmic channels called plasmodesmata . Photosynthates move through these channels to reach phloem sieve-tube elements ( STEs ) in the vascular bundles . From the mesophyll cells , the photosynthates are loaded into the phloem STEs . The sucrose is actively transported against its concentration gradient ( a process requiring ATP ) into the phloem cells using the electrochemical potential of the proton gradient . This is coupled to the uptake of sucrose with a carrier protein called the sucrose-H + symporter . Phloem STEs have reduced cytoplasmic contents , and are connected by a sieve plate with pores that allow for pressure-driven bulk flow , or translocation , of phloem sap . Companion cells are associated with STEs . They assist with metabolic activities and produce energy for the STEs ( Figure 30.36 ) .\",\n \"hl_sentences\": \"Photosynthates move through these channels to reach phloem sieve-tube elements ( STEs ) in the vascular bundles .\",\n \"question\": {\n \"cloze_format\": \"The cells ___ are responsible for the movement of photosynthates through a plant.\",\n \"normal_format\": \"Which cells are responsible for the movement of photosynthates through a plant?\",\n \"question_choices\": [\n \"tracheids, vessel elements\",\n \"tracheids, companion cells\",\n \"vessel elements, companion cells\",\n \"sieve-tube elements, companion cells\"\n ],\n \"question_id\": \"fs-idm12618624\",\n \"question_text\": \"Which cells are responsible for the movement of photosynthates through a plant?\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 2,\n \"ans_text\": \"phototropin\"\n },\n \"bloom\": null,\n \"hl_context\": \" The aptly-named phototropins are protein-based receptors responsible for mediating the phototropic response . Like all plant photoreceptors , phototropins consist of a protein portion and a light-absorbing portion , called the chromophore . In phototropins , the chromophore is a covalently-bound molecule of flavin ; hence , phototropins belong to a class of proteins called flavoproteins .\",\n \"hl_sentences\": \"The aptly-named phototropins are protein-based receptors responsible for mediating the phototropic response .\",\n \"question\": {\n \"cloze_format\": \"The main photoreceptor that triggers phototropism is a ________.\",\n \"normal_format\": \"What is the main photoreceptor that triggers phototropism?\",\n \"question_choices\": [\n \"phytochrome\",\n \"cryptochrome\",\n \"phototropin\",\n \"carotenoid\"\n ],\n \"question_id\": \"fs-idp103337616\",\n \"question_text\": \"The main photoreceptor that triggers phototropism is a ________.\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 2,\n \"ans_text\": \"mediates morphological changes in response to red and far-red light\"\n },\n \"bloom\": null,\n \"hl_context\": \"The phytochromes are a family of chromoproteins with a linear tetrapyrrole chromophore , similar to the ringed tetrapyrrole light-absorbing head group of chlorophyll . Phytochromes have two photo-interconvertible forms : Pr and Pfr . Pr absorbs red light ( ~ 667 nm ) and is immediately converted to Pfr . Pfr absorbs far-red light ( ~ 730 nm ) and is quickly converted back to Pr . Absorption of red or far-red light causes a massive change to the shape of the chromophore , altering the conformation and activity of the phytochrome protein to which it is bound . Pfr is the physiologically active form of the protein ; therefore , exposure to red light yields physiological activity . Exposure to far-red light inhibits phytochrome activity . Together , the two forms represent the phytochrome system ( Figure 30.38 ) .\",\n \"hl_sentences\": \"Phytochromes have two photo-interconvertible forms : Pr and Pfr . Pr absorbs red light ( ~ 667 nm ) and is immediately converted to Pfr . Absorption of red or far-red light causes a massive change to the shape of the chromophore , altering the conformation and activity of the phytochrome protein to which it is bound .\",\n \"question\": {\n \"cloze_format\": \"Phytochrome is a plant pigment protein that ___.\",\n \"normal_format\": \"What is Phytochrome, a plant pigment protein?\",\n \"question_choices\": [\n \"mediates plant infection\",\n \"promotes plant growth\",\n \"mediates morphological changes in response to red and far-red light\",\n \"inhibits plant growth\"\n ],\n \"question_id\": \"fs-idp154368896\",\n \"question_text\": \"Phytochrome is a plant pigment protein that:\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 1,\n \"ans_text\": \"amyloplast\"\n },\n \"bloom\": null,\n \"hl_context\": \" Amyloplasts ( also known as statoliths ) are specialized plastids that contain starch granules and settle downward in response to gravity . Amyloplasts are found in shoots and in specialized cells of the root cap . When a plant is tilted , the statoliths drop to the new bottom cell wall . A few hours later , the shoot or root will show growth in the new vertical direction .\",\n \"hl_sentences\": \"Amyloplasts ( also known as statoliths ) are specialized plastids that contain starch granules and settle downward in response to gravity .\",\n \"question\": {\n \"cloze_format\": \"A mutant plant has roots that grow in all directions. The organelle that you would expect to be missing in the cell is ___.\",\n \"normal_format\": \"A mutant plant has roots that grow in all directions. Which of the following organelles would you expect to be missing in the cell?\",\n \"question_choices\": [\n \"mitochondria\",\n \"amyloplast\",\n \"chloroplast\",\n \"nucleus\"\n ],\n \"question_id\": \"fs-idm61790704\",\n \"question_text\": \"A mutant plant has roots that grow in all directions. Which of the following organelles would you expect to be missing in the cell?\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 2,\n \"ans_text\": \"ethylene\"\n },\n \"bloom\": null,\n \"hl_context\": \" Aging tissues ( especially senescing leaves ) and nodes of stems produce ethylene . The best-known effect of the hormone , however , is the promotion of fruit ripening . Ethylene stimulates the conversion of starch and acids to sugars . Some people store unripe fruit , such as avocadoes , in a sealed paper bag to accelerate ripening ; the gas released by the first fruit to mature will speed up the maturation of the remaining fruit . Ethylene also triggers leaf and fruit abscission , flower fading and dropping , and promotes germination in some cereals and sprouting of bulbs and potatoes .\",\n \"hl_sentences\": \"Aging tissues ( especially senescing leaves ) and nodes of stems produce ethylene . The best-known effect of the hormone , however , is the promotion of fruit ripening . Some people store unripe fruit , such as avocadoes , in a sealed paper bag to accelerate ripening ; the gas released by the first fruit to mature will speed up the maturation of the remaining fruit .\",\n \"question\": {\n \"cloze_format\": \"After buying green bananas or unripe avocadoes, they can be kept in a brown bag to ripen. The hormone released by the fruit and trapped in the bag is probably ___.\",\n \"normal_format\": \"After buying green bananas or unripe avocadoes, they can be kept in a brown bag to ripen. What is the hormone that released by the fruit and trapped in the bag?\",\n \"question_choices\": [\n \"abscisic acid\",\n \"cytokinin\",\n \"ethylene\",\n \"gibberellic acid\"\n ],\n \"question_id\": \"fs-idm41201088\",\n \"question_text\": \"After buying green bananas or unripe avocadoes, they can be kept in a brown bag to ripen. The hormone released by the fruit and trapped in the bag is probably:\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 0,\n \"ans_text\": \"abscisic acid\"\n },\n \"bloom\": null,\n \"hl_context\": \" The plant hormone abscisic acid ( ABA ) was first discovered as the agent that causes the abscission or dropping of cotton bolls . However , more recent studies indicate that ABA plays only a minor role in the abscission process . ABA accumulates as a response to stressful environmental conditions , such as dehydration , cold temperatures , or shortened day lengths . Its activity counters many of the growth-promoting effects of GAs and auxins . ABA inhibits stem elongation and induces dormancy in lateral buds . \",\n \"hl_sentences\": \"The plant hormone abscisic acid ( ABA ) was first discovered as the agent that causes the abscission or dropping of cotton bolls . ABA inhibits stem elongation and induces dormancy in lateral buds .\",\n \"question\": {\n \"cloze_format\": \"A decrease in the level of ___ releases seeds from dormancy.\",\n \"normal_format\": \"A decrease in the level of which hormone releases seeds from dormancy?\",\n \"question_choices\": [\n \"abscisic acid\",\n \"cytokinin\",\n \"ethylene\",\n \"gibberellic acid\"\n ],\n \"question_id\": \"fs-idp149917488\",\n \"question_text\": \"A decrease in the level of which hormone releases seeds from dormancy?\"\n },\n \"references_are_paraphrase\": null\n },\n {\n \"answer\": {\n \"ans_choice\": 2,\n \"ans_text\": \"thigmotropism\"\n },\n \"bloom\": null,\n \"hl_context\": \" The movement of a plant subjected to constant directional pressure is called thigmotropism , from the Greek words thigma meaning “ touch , ” and tropism implying “ direction . ” Tendrils are one example of this . The meristematic region of tendrils is very touch sensitive ; light touch will evoke a quick coiling response . Cells in contact with a support surface contract , whereas cells on the opposite side of the support expand ( Figure 30.14 ) . Application of jasmonic acid is sufficient to trigger tendril coiling without a mechanical stimulus . A thigmonastic response is a touch response independent of the direction of stimulus Figure 30.24 . In the Venus flytrap , two modified leaves are joined at a hinge and lined with thin fork-like tines along the outer edges . Tiny hairs are located inside the trap . When an insect brushes against these trigger hairs , touching two or more of them in succession , the leaves close quickly , trapping the prey . Glands on the leaf surface secrete enzymes that slowly digest the insect . The released nutrients are absorbed by the leaves , which reopen for the next meal . Thigmomorphogenesis is a slow developmental change in the shape of a plant subjected to continuous mechanical stress . When trees bend in the wind , for example , growth is usually stunted and the trunk thickens . Strengthening tissue , especially xylem , is produced to add stiffness to resist the wind ’ s force . Researchers hypothesize that mechanical strain induces growth and differentiation to strengthen the tissues . Ethylene and jasmonate are likely involved in thigmomorphogenesis .\",\n \"hl_sentences\": \"The movement of a plant subjected to constant directional pressure is called thigmotropism , from the Greek words thigma meaning “ touch , ” and tropism implying “ direction . ” Tendrils are one example of this . Cells in contact with a support surface contract , whereas cells on the opposite side of the support expand ( Figure 30.14 ) .\",\n \"question\": {\n \"cloze_format\": \"A seedling germinating under a stone grows at an angle away from the stone and upward. This response to touch is called ________.\",\n \"normal_format\": \"A seedling germinating under a stone grows at an angle away from the stone and upward. What is this response to touch called?\",\n \"question_choices\": [\n \"gravitropism\",\n \"thigmonasty\",\n \"thigmotropism\",\n \"skototropism\"\n ],\n \"question_id\": \"fs-idp109014384\",\n \"question_text\": \"A seedling germinating under a stone grows at an angle away from the stone and upward. This response to touch is called ________.\"\n },\n \"references_are_paraphrase\": null\n }\n]"},"chapter":{"kind":"number","value":30,"string":"30"},"chapter_text":{"kind":"string","value":"30.1 The Plant Body Learning Objectives By the end of this section, you will be able to:\n\n Describe the shoot organ system and the root organ system \n\n Distinguish between meristematic tissue and permanent tissue \n\n Identify and describe the three regions where plant growth occurs \n\n Summarize the roles of dermal tissue, vascular tissue, and ground tissue \n\n Compare simple plant tissue with complex plant tissue \n\n Like animals, plants contain cells with organelles in which specific metabolic activities take place. Unlike animals, however, plants use energy from sunlight to form sugars during photosynthesis. In addition, plant cells have cell walls, plastids, and a large central vacuole: structures that are not found in animal cells. Each of these cellular structures plays a specific role in plant structure and function. \n\n Link to Learning \n\n Watch Botany Without Borders , a video produced by the Botanical Society of America about the importance of plants. \n\n Plant Organ Systems \n\n In plants, just as in animals, similar cells working together form a tissue. When different types of tissues work together to perform a unique function, they form an organ; organs working together form organ systems. Vascular plants have two distinct organ systems: a shoot system, and a root system. The shoot system consists of two portions: the vegetative (non-reproductive) parts of the plant, such as the leaves and the stems, and the reproductive parts of the plant, which include flowers and fruits. The shoot system generally grows above ground, where it absorbs the light needed for photosynthesis. The root system , which supports the plants and absorbs water and minerals, is usually underground. Figure 30.2 shows the organ systems of a typical plant. \n\n Plant Tissues \n\n Plants are multicellular eukaryotes with tissue systems made of various cell types that carry out specific functions. Plant tissue systems fall into one of two general types: meristematic tissue, and permanent (or non-meristematic) tissue. Cells of the meristematic tissue are found in meristems , which are plant regions of continuous cell division and growth. Meristematic tissue cells are either undifferentiated or incompletely differentiated, and they continue to divide and contribute to the growth of the plant. In contrast, permanent tissue consists of plant cells that are no longer actively dividing. \n\n Meristematic tissues consist of three types, based on their location in the plant. Apical meristems contain meristematic tissue located at the tips of stems and roots, which enable a plant to extend in length. Lateral meristems facilitate growth in thickness or girth in a maturing plant. Intercalary meristems occur only in monocots, at the bases of leaf blades and at nodes (the areas where leaves attach to a stem). This tissue enables the monocot leaf blade to increase in length from the leaf base; for example, it allows lawn grass leaves to elongate even after repeated mowing. \n\n Meristems produce cells that quickly differentiate, or specialize, and become permanent tissue. Such cells take on specific roles and lose their ability to divide further. They differentiate into three main types: dermal, vascular, and ground tissue. Dermal tissue covers and protects the plant, and vascular tissue transports water, minerals, and sugars to different parts of the plant. Ground tissue serves as a site for photosynthesis, provides a supporting matrix for the vascular tissue, and helps to store water and sugars. \n\n Secondary tissues are either simple (composed of similar cell types) or complex (composed of different cell types). Dermal tissue, for example, is a simple tissue that covers the outer surface of the plant and controls gas exchange. Vascular tissue is an example of a complex tissue, and is made of two specialized conducting tissues: xylem and phloem. Xylem tissue transports water and nutrients from the roots to different parts of the plant, and includes three different cell types: vessel elements and tracheids (both of which conduct water), and xylem parenchyma. Phloem tissue, which transports organic compounds from the site of photosynthesis to other parts of the plant, consists of four different cell types: sieve cells (which conduct photosynthates), companion cells, phloem parenchyma, and phloem fibers. Unlike xylem conducting cells, phloem conducting cells are alive at maturity. The xylem and phloem always lie adjacent to each other ( Figure 30.3 ). In stems, the xylem and the phloem form a structure called a vascular bundle ; in roots, this is termed the vascular stele or vascular cylinder . \n30.2 Stems Learning Objectives By the end of this section, you will be able to:\n\n Describe the main function and basic structure of stems \n\n Compare and contrast the roles of dermal tissue, vascular tissue, and ground tissue \n\n Distinguish between primary growth and secondary growth in stems \n\n Summarize the origin of annual rings \n\n List and describe examples of modified stems \n\n Stems are a part of the shoot system of a plant. They may range in length from a few millimeters to hundreds of meters, and also vary in diameter, depending on the plant type. Stems are usually above ground, although the stems of some plants, such as the potato, also grow underground. Stems may be herbaceous (soft) or woody in nature. Their main function is to provide support to the plant, holding leaves, flowers and buds; in some cases, stems also store food for the plant. A stem may be unbranched, like that of a palm tree, or it may be highly branched, like that of a magnolia tree. The stem of the plant connects the roots to the leaves, helping to transport absorbed water and minerals to different parts of the plant. It also helps to transport the products of photosynthesis, namely sugars, from the leaves to the rest of the plant. \n\n Plant stems, whether above or below ground, are characterized by the presence of nodes and internodes ( Figure 30.4 ). Nodes are points of attachment for leaves, aerial roots, and flowers. The stem region between two nodes is called an internode . The stalk that extends from the stem to the base of the leaf is the petiole. An axillary bud is usually found in the axil—the area between the base of a leaf and the stem—where it can give rise to a branch or a flower. The apex (tip) of the shoot contains the apical meristem within the apical bud . \n\n Stem Anatomy \n\n The stem and other plant organs arise from the ground tissue, and are primarily made up of simple tissues formed from three types of cells: parenchyma, collenchyma, and sclerenchyma cells. \n\n Parenchyma cells are the most common plant cells ( Figure 30.5 ). They are found in the stem, the root, the inside of the leaf, and the pulp of the fruit. Parenchyma cells are responsible for metabolic functions, such as photosynthesis, and they help repair and heal wounds. Some parenchyma cells also store starch. \n\n Collenchyma cells are elongated cells with unevenly thickened walls ( Figure 30.6 ). They provide structural support, mainly to the stem and leaves. These cells are alive at maturity and are usually found below the epidermis. The “strings” of a celery stalk are an example of collenchyma cells. \n\n Sclerenchyma cells also provide support to the plant, but unlike collenchyma cells, many of them are dead at maturity. There are two types of sclerenchyma cells: fibers and sclereids. Both types have secondary cell walls that are thickened with deposits of lignin, an organic compound that is a key component of wood. Fibers are long, slender cells; sclereids are smaller-sized. Sclereids give pears their gritty texture. Humans use sclerenchyma fibers to make linen and rope ( Figure 30.7 ). \n\n Visual Connection \n\n Which layers of the stem are made of parenchyma cells? \n\n cortex and pith \n\n phloem \n\n sclerenchyma \n\n xylem \n\n Like the rest of the plant, the stem has three tissue systems: dermal, vascular, and ground tissue. Each is distinguished by characteristic cell types that perform specific tasks necessary for the plant’s growth and survival. \n\n Dermal Tissue \n\n The dermal tissue of the stem consists primarily of epidermis , a single layer of cells covering and protecting the underlying tissue. Woody plants have a tough, waterproof outer layer of cork cells commonly known as bark , which further protects the plant from damage. Epidermal cells are the most numerous and least differentiated of the cells in the epidermis. The epidermis of a leaf also contains openings known as stomata, through which the exchange of gases takes place ( Figure 30.8 ). Two cells, known as guard cells , surround each leaf stoma, controlling its opening and closing and thus regulating the uptake of carbon dioxide and the release of oxygen and water vapor. Trichomes are hair-like structures on the epidermal surface. They help to reduce transpiration (the loss of water by aboveground plant parts), increase solar reflectance, and store compounds that defend the leaves against predation by herbivores. \n\n Vascular Tissue \n\n The xylem and phloem that make up the vascular tissue of the stem are arranged in distinct strands called vascular bundles, which run up and down the length of the stem. When the stem is viewed in cross section, the vascular bundles of dicot stems are arranged in a ring. In plants with stems that live for more than one year, the individual bundles grow together and produce the characteristic growth rings. In monocot stems, the vascular bundles are randomly scattered throughout the ground tissue ( Figure 30.9 ). \n\n Xylem tissue has three types of cells: xylem parenchyma, tracheids, and vessel elements. The latter two types conduct water and are dead at maturity. Tracheids are xylem cells with thick secondary cell walls that are lignified. Water moves from one tracheid to another through regions on the side walls known as pits, where secondary walls are absent. Vessel elements are xylem cells with thinner walls; they are shorter than tracheids. Each vessel element is connected to the next by means of a perforation plate at the end walls of the element. Water moves through the perforation plates to travel up the plant. \n\n Phloem tissue is composed of sieve-tube cells, companion cells, phloem parenchyma, and phloem fibers. A series of sieve-tube cells (also called sieve-tube elements) are arranged end to end to make up a long sieve tube, which transports organic substances such as sugars and amino acids. The sugars flow from one sieve-tube cell to the next through perforated sieve plates, which are found at the end junctions between two cells. Although still alive at maturity, the nucleus and other cell components of the sieve-tube cells have disintegrated. Companion cells are found alongside the sieve-tube cells, providing them with metabolic support. The companion cells contain more ribosomes and mitochondria than the sieve-tube cells, which lack some cellular organelles. \n\n Ground Tissue \n\n Ground tissue is mostly made up of parenchyma cells, but may also contain collenchyma and sclerenchyma cells that help support the stem. The ground tissue towards the interior of the vascular tissue in a stem or root is known as pith , while the layer of tissue between the vascular tissue and the epidermis is known as the cortex . \n\n Growth in Stems \n\n Growth in plants occurs as the stems and roots lengthen. Some plants, especially those that are woody, also increase in thickness during their life span. The increase in length of the shoot and the root is referred to as primary growth , and is the result of cell division in the shoot apical meristem. Secondary growth is characterized by an increase in thickness or girth of the plant, and is caused by cell division in the lateral meristem. Figure 30.10 shows the areas of primary and secondary growth in a plant. Herbaceous plants mostly undergo primary growth, with hardly any secondary growth or increase in thickness. Secondary growth or “wood” is noticeable in woody plants; it occurs in some dicots, but occurs very rarely in monocots. \n\n Some plant parts, such as stems and roots, continue to grow throughout a plant’s life: a phenomenon called indeterminate growth. Other plant parts, such as leaves and flowers, exhibit determinate growth, which ceases when a plant part reaches a particular size. \n\n Primary Growth \n\n Most primary growth occurs at the apices, or tips, of stems and roots. Primary growth is a result of rapidly dividing cells in the apical meristems at the shoot tip and root tip. Subsequent cell elongation also contributes to primary growth. The growth of shoots and roots during primary growth enables plants to continuously seek water (roots) or sunlight (shoots). \n\n The influence of the apical bud on overall plant growth is known as apical dominance, which diminishes the growth of axillary buds that form along the sides of branches and stems. Most coniferous trees exhibit strong apical dominance, thus producing the typical conical Christmas tree shape. If the apical bud is removed, then the axillary buds will start forming lateral branches. Gardeners make use of this fact when they prune plants by cutting off the tops of branches, thus encouraging the axillary buds to grow out, giving the plant a bushy shape. \n\n Link to Learning \n\n Watch this BBC Nature video showing how time-lapse photography captures plant growth at high speed. \n\n Secondary Growth \n\n The increase in stem thickness that results from secondary growth is due to the activity of the lateral meristems, which are lacking in herbaceous plants. Lateral meristems include the vascular cambium and, in woody plants, the cork cambium (see Figure 30.10 ). The vascular cambium is located just outside the primary xylem and to the interior of the primary phloem. The cells of the vascular cambium divide and form secondary xylem (tracheids and vessel elements) to the inside, and secondary phloem (sieve elements and companion cells) to the outside. The thickening of the stem that occurs in secondary growth is due to the formation of secondary phloem and secondary xylem by the vascular cambium, plus the action of cork cambium, which forms the tough outermost layer of the stem. The cells of the secondary xylem contain lignin, which provides hardiness and strength. \n\n In woody plants, cork cambium is the outermost lateral meristem. It produces cork cells (bark) containing a waxy substance known as suberin that can repel water. The bark protects the plant against physical damage and helps reduce water loss. The cork cambium also produces a layer of cells known as phelloderm, which grows inward from the cambium. The cork cambium, cork cells, and phelloderm are collectively termed the periderm . The periderm substitutes for the epidermis in mature plants. In some plants, the periderm has many openings, known as lenticels , which allow the interior cells to exchange gases with the outside atmosphere ( Figure 30.11 ). This supplies oxygen to the living and metabolically active cells of the cortex, xylem and phloem. \n\n Annual Rings \n\n The activity of the vascular cambium gives rise to annual growth rings. During the spring growing season, cells of the secondary xylem have a large internal diameter and their primary cell walls are not extensively thickened. This is known as early wood, or spring wood. During the fall season, the secondary xylem develops thickened cell walls, forming late wood, or autumn wood, which is denser than early wood. This alternation of early and late wood is due largely to a seasonal decrease in the number of vessel elements and a seasonal increase in the number of tracheids. It results in the formation of an annual ring, which can be seen as a circular ring in the cross section of the stem ( Figure 30.12 ). An examination of the number of annual rings and their nature (such as their size and cell wall thickness) can reveal the age of the tree and the prevailing climatic conditions during each season. \n\n Stem Modifications \n\n Some plant species have modified stems that are especially suited to a particular habitat and environment ( Figure 30.13 ). A rhizome is a modified stem that grows horizontally underground and has nodes and internodes. Vertical shoots may arise from the buds on the rhizome of some plants, such as ginger and ferns. Corms are similar to rhizomes, except they are more rounded and fleshy (such as in gladiolus). Corms contain stored food that enables some plants to survive the winter. Stolons are stems that run almost parallel to the ground, or just below the surface, and can give rise to new plants at the nodes. Runners are a type of stolon that runs above the ground and produces new clone plants at nodes at varying intervals: strawberries are an example. Tubers are modified stems that may store starch, as seen in the potato ( Solanum sp.). Tubers arise as swollen ends of stolons, and contain many adventitious or unusual buds (familiar to us as the “eyes” on potatoes). A bulb , which functions as an underground storage unit, is a modification of a stem that has the appearance of enlarged fleshy leaves emerging from the stem or surrounding the base of the stem, as seen in the iris. \n\n Link to Learning \n\n Watch botanist Wendy Hodgson, of Desert Botanical Garden in Phoenix, Arizona, explain how agave plants were cultivated for food hundreds of years ago in the Arizona desert in this video: Finding the Roots of an Ancient Crop. \n\n Some aerial modifications of stems are tendrils and thorns ( Figure 30.14 ). Tendrils are slender, twining strands that enable a plant (like a vine or pumpkin) to seek support by climbing on other surfaces. Thorns are modified branches appearing as sharp outgrowths that protect the plant; common examples include roses, Osage orange and devil’s walking stick. \n30.3 Roots Learning Objectives By the end of this section, you will be able to:\n\n Identify the two types of root systems \n\n Describe the three zones of the root tip and summarize the role of each zone in root growth \n\n Describe the structure of the root \n\n List and describe examples of modified roots \n\n The roots of seed plants have three major functions: anchoring the plant to the soil, absorbing water and minerals and transporting them upwards, and storing the products of photosynthesis. Some roots are modified to absorb moisture and exchange gases. Most roots are underground. Some plants, however, also have adventitious roots , which emerge above the ground from the shoot. \n\n Types of Root Systems \n\n Root systems are mainly of two types ( Figure 30.15 ). Dicots have a tap root system, while monocots have a fibrous root system. A tap root system has a main root that grows down vertically, and from which many smaller lateral roots arise. Dandelions are a good example; their tap roots usually break off when trying to pull these weeds, and they can regrow another shoot from the remaining root). A tap root system penetrates deep into the soil. In contrast, a fibrous root system is located closer to the soil surface, and forms a dense network of roots that also helps prevent soil erosion (lawn grasses are a good example, as are wheat, rice, and corn). Some plants have a combination of tap roots and fibrous roots. Plants that grow in dry areas often have deep root systems, whereas plants growing in areas with abundant water are likely to have shallower root systems. \n\n Root Growth and Anatomy \n\n Root growth begins with seed germination. When the plant embryo emerges from the seed, the radicle of the embryo forms the root system. The tip of the root is protected by the root cap , a structure exclusive to roots and unlike any other plant structure. The root cap is continuously replaced because it gets damaged easily as the root pushes through soil. The root tip can be divided into three zones: a zone of cell division, a zone of elongation, and a zone of maturation and differentiation ( Figure 30.16 ). The zone of cell division is closest to the root tip; it is made up of the actively dividing cells of the root meristem. The zone of elongation is where the newly formed cells increase in length, thereby lengthening the root. Beginning at the first root hair is the zone of cell maturation where the root cells begin to differentiate into special cell types. All three zones are in the first centimeter or so of the root tip. \n\n The root has an outer layer of cells called the epidermis, which surrounds areas of ground tissue and vascular tissue. The epidermis provides protection and helps in absorption. Root hairs , which are extensions of root epidermal cells, increase the surface area of the root, greatly contributing to the absorption of water and minerals. \n\n Inside the root, the ground tissue forms two regions: the cortex and the pith ( Figure 30.17 ). Compared to stems, roots have lots of cortex and little pith. Both regions include cells that store photosynthetic products. The cortex is between the epidermis and the vascular tissue, whereas the pith lies between the vascular tissue and the center of the root. \n\n The vascular tissue in the root is arranged in the inner portion of the root, which is called the stele ( Figure 30.18 ). A layer of cells known as the endodermis separates the stele from the ground tissue in the outer portion of the root. The endodermis is exclusive to roots, and serves as a checkpoint for materials entering the root’s vascular system. A waxy substance called suberin is present on the walls of the endodermal cells. This waxy region, known as the Casparian strip , forces water and solutes to cross the plasma membranes of endodermal cells instead of slipping between the cells. This ensures that only materials required by the root pass through the endodermis, while toxic substances and pathogens are generally excluded. The outermost cell layer of the root’s vascular tissue is the pericycle , an area that can give rise to lateral roots. In dicot roots, the xylem and phloem of the stele are arranged alternately in an X shape, whereas in monocot roots, the vascular tissue is arranged in a ring around the pith. \n\n Root Modifications \n\n Root structures may be modified for specific purposes. For example, some roots are bulbous and store starch. Aerial roots and prop roots are two forms of aboveground roots that provide additional support to anchor the plant. Tap roots, such as carrots, turnips, and beets, are examples of roots that are modified for food storage ( Figure 30.19 ). \n\n Epiphytic roots enable a plant to grow on another plant. For example, the epiphytic roots of orchids develop a spongy tissue to absorb moisture. The banyan tree ( Ficus sp.) begins as an epiphyte, germinating in the branches of a host tree; aerial roots develop from the branches and eventually reach the ground, providing additional support ( Figure 30.20 ). In screwpine ( Pandanus sp.), a palm-like tree that grows in sandy tropical soils, aboveground prop roots develop from the nodes to provide additional support. \n30.4 Leaves Learning Objectives By the end of this section, you will be able to:\n\n Identify the parts of a typical leaf \n\n Describe the internal structure and function of a leaf \n\n Compare and contrast simple leaves and compound leaves \n\n List and describe examples of modified leaves \n\n Leaves are the main sites for photosynthesis: the process by which plants synthesize food. Most leaves are usually green, due to the presence of chlorophyll in the leaf cells. However, some leaves may have different colors, caused by other plant pigments that mask the green chlorophyll. \n\n The thickness, shape, and size of leaves are adapted to the environment. Each variation helps a plant species maximize its chances of survival in a particular habitat. Usually, the leaves of plants growing in tropical rainforests have larger surface areas than those of plants growing in deserts or very cold conditions, which are likely to have a smaller surface area to minimize water loss. \n\n Structure of a Typical Leaf \n\n Each leaf typically has a leaf blade called the lamina , which is also the widest part of the leaf. Some leaves are attached to the plant stem by a petiole . Leaves that do not have a petiole and are directly attached to the plant stem are called sessile leaves. Small green appendages usually found at the base of the petiole are known as stipules . Most leaves have a midrib, which travels the length of the leaf and branches to each side to produce veins of vascular tissue. The edge of the leaf is called the margin. Figure 30.21 shows the structure of a typical eudicot leaf. \n\n Within each leaf, the vascular tissue forms veins. The arrangement of veins in a leaf is called the venation pattern. Monocots and dicots differ in their patterns of venation ( Figure 30.22 ). Monocots have parallel venation; the veins run in straight lines across the length of the leaf without converging at a point. In dicots, however, the veins of the leaf have a net-like appearance, forming a pattern known as reticulate venation. One extant plant, the Ginkgo biloba , has dichotomous venation where the veins fork. \n\n Leaf Arrangement \n\n The arrangement of leaves on a stem is known as phyllotaxy . The number and placement of a plant’s leaves will vary depending on the species, with each species exhibiting a characteristic leaf arrangement. Leaves are classified as either alternate, spiral, or opposite. Plants that have only one leaf per node have leaves that are said to be either alternate—meaning the leaves alternate on each side of the stem in a flat plane—or spiral, meaning the leaves are arrayed in a spiral along the stem. In an opposite leaf arrangement, two leaves arise at the same point, with the leaves connecting opposite each other along the branch. If there are three or more leaves connected at a node, the leaf arrangement is classified as whorled . \n\n Leaf Form \n\n Leaves may be simple or compound ( Figure 30.23 ). In a simple leaf , the blade is either completely undivided—as in the banana leaf—or it has lobes, but the separation does not reach the midrib, as in the maple leaf. In a compound leaf , the leaf blade is completely divided, forming leaflets, as in the locust tree. Each leaflet may have its own stalk, but is attached to the rachis. A palmately compound leaf resembles the palm of a hand, with leaflets radiating outwards from one point Examples include the leaves of poison ivy, the buckeye tree, or the familiar houseplant Schefflera sp. (common name “umbrella plant”). Pinnately compound leaves take their name from their feather-like appearance; the leaflets are arranged along the midrib, as in rose leaves ( Rosa sp.), or the leaves of hickory, pecan, ash, or walnut trees. \n\n Leaf Structure and Function \n\n The outermost layer of the leaf is the epidermis; it is present on both sides of the leaf and is called the upper and lower epidermis, respectively. Botanists call the upper side the adaxial surface (or adaxis) and the lower side the abaxial surface (or abaxis). The epidermis helps in the regulation of gas exchange. It contains stomata ( Figure 30.24 ): openings through which the exchange of gases takes place. Two guard cells surround each stoma, regulating its opening and closing. \n\n The epidermis is usually one cell layer thick; however, in plants that grow in very hot or very cold conditions, the epidermis may be several layers thick to protect against excessive water loss from transpiration. A waxy layer known as the cuticle covers the leaves of all plant species. The cuticle reduces the rate of water loss from the leaf surface. Other leaves may have small hairs (trichomes) on the leaf surface. Trichomes help to deter herbivory by restricting insect movements, or by storing toxic or bad-tasting compounds; they can also reduce the rate of transpiration by blocking air flow across the leaf surface ( Figure 30.25 ). \n\n Below the epidermis of dicot leaves are layers of cells known as the mesophyll, or “middle leaf.” The mesophyll of most leaves typically contains two arrangements of parenchyma cells: the palisade parenchyma and spongy parenchyma ( Figure 30.26 ). The palisade parenchyma (also called the palisade mesophyll) has column-shaped, tightly packed cells, and may be present in one, two, or three layers. Below the palisade parenchyma are loosely arranged cells of an irregular shape. These are the cells of the spongy parenchyma (or spongy mesophyll). The air space found between the spongy parenchyma cells allows gaseous exchange between the leaf and the outside atmosphere through the stomata. In aquatic plants, the intercellular spaces in the spongy parenchyma help the leaf float. Both layers of the mesophyll contain many chloroplasts. Guard cells are the only epidermal cells to contain chloroplasts. Like the stem, the leaf contains vascular bundles composed of xylem and phloem ( Figure 30.27 ). The xylem consists of tracheids and vessels, which transport water and minerals to the leaves. The phloem transports the photosynthetic products from the leaf to the other parts of the plant. A single vascular bundle, no matter how large or small, always contains both xylem and phloem tissues. \n\n Leaf Adaptations Coniferous plant species that thrive in cold environments, like spruce, fir, and pine, have leaves that are reduced in size and needle-like in appearance. These needle-like leaves have sunken stomata and a smaller surface area: two attributes that aid in reducing water loss. In hot climates, plants such as cacti have leaves that are reduced to spines, which in combination with their succulent stems, help to conserve water. Many aquatic plants have leaves with wide lamina that can float on the surface of the water, and a thick waxy cuticle on the leaf surface that repels water. Link to Learning \n\n Watch “The Pale Pitcher Plant” episode of the video series Plants Are Cool, Too, a Botanical Society of America video about a carnivorous plant species found in Louisiana. \n\n Evolution Connection Plant Adaptations in Resource-Deficient Environments \n\n Roots, stems, and leaves are structured to ensure that a plant can obtain the required sunlight, water, soil nutrients, and oxygen resources. Some remarkable adaptations have evolved to enable plant species to thrive in less than ideal habitats, where one or more of these resources is in short supply. \n\n In tropical rainforests, light is often scarce, since many trees and plants grow close together and block much of the sunlight from reaching the forest floor. Many tropical plant species have exceptionally broad leaves to maximize the capture of sunlight. Other species are epiphytes: plants that grow on other plants that serve as a physical support. Such plants are able to grow high up in the canopy atop the branches of other trees, where sunlight is more plentiful. Epiphytes live on rain and minerals collected in the branches and leaves of the supporting plant. Bromeliads (members of the pineapple family), ferns, and orchids are examples of tropical epiphytes ( Figure 30.28 ). Many epiphytes have specialized tissues that enable them to efficiently capture and store water. \n\n Some plants have special adaptations that help them to survive in nutrient-poor environments. Carnivorous plants, such as the Venus flytrap and the pitcher plant ( Figure 30.29 ), grow in bogs where the soil is low in nitrogen. In these plants, leaves are modified to capture insects. The insect-capturing leaves may have evolved to provide these plants with a supplementary source of much-needed nitrogen. \n\n Many swamp plants have adaptations that enable them to thrive in wet areas, where their roots grow submerged underwater. In these aquatic areas, the soil is unstable and little oxygen is available to reach the roots. Trees such as mangroves ( Rhizophora sp.) growing in coastal waters produce aboveground roots that help support the tree ( Figure 30.30 ). Some species of mangroves, as well as cypress trees, have pneumatophores: upward-growing roots containing pores and pockets of tissue specialized for gas exchange. Wild rice is an aquatic plant with large air spaces in the root cortex. The air-filled tissue—called aerenchyma—provides a path for oxygen to diffuse down to the root tips, which are embedded in oxygen-poor bottom sediments. \n\n Link to Learning \n\n Watch Venus Flytraps: Jaws of Death , an extraordinary BBC close-up of the Venus flytrap in action.\n\n Click to view content \n30.5 Transport of Water and Solutes in Plants Learning Objectives By the end of this section, you will be able to:\n\n Define water potential and explain how it is influenced by solutes, pressure, gravity, and the matric potential \n\n Describe how water potential, evapotranspiration, and stomatal regulation influence how water is transported in plants \n\n Explain how photosynthates are transported in plants \n\n The structure of plant roots, stems, and leaves facilitates the transport of water, nutrients, and photosynthates throughout the plant. The phloem and xylem are the main tissues responsible for this movement. Water potential, evapotranspiration, and stomatal regulation influence how water and nutrients are transported in plants. To understand how these processes work, we must first understand the energetics of water potential. \n\n Water Potential \n\n Plants are phenomenal hydraulic engineers. Using only the basic laws of physics and the simple manipulation of potential energy, plants can move water to the top of a 116-meter-tall tree ( Figure 30.31 a ). Plants can also use hydraulics to generate enough force to split rocks and buckle sidewalks ( Figure 30.31 b ). Plants achieve this because of water potential. Water potential is a measure of the potential energy in water. Plant physiologists are not interested in the energy in any one particular aqueous system, but are very interested in water movement between two systems. In practical terms, therefore, water potential is the difference in potential energy between a given water sample and pure water (at atmospheric pressure and ambient temperature). Water potential is denoted by the Greek letter ψ ( psi ) and is expressed in units of pressure (pressure is a form of energy) called megapascals (MPa). The potential of pure water (Ψ w pure H2O ) is, by convenience of definition, designated a value of zero (even though pure water contains plenty of potential energy, that energy is ignored). Water potential values for the water in a plant root, stem, or leaf are therefore expressed relative to Ψ w pure H2O . \n\n The water potential in plant solutions is influenced by solute concentration, pressure, gravity, and factors called matrix effects. Water potential can be broken down into its individual components using the following equation: \n\n Ψ \n\n system \n\n = \n\n Ψ \n\n total \n\n = \n\n Ψ \n\n s \n\n + \n\n Ψ \n\n p \n\n + \n\n Ψ \n\n g \n\n + \n\n Ψ \n\n m \n\n Ψ \n\n system \n\n = \n\n Ψ \n\n total \n\n = \n\n Ψ \n\n s \n\n + \n\n Ψ \n\n p \n\n + \n\n Ψ \n\n g \n\n + \n\n Ψ \n\n m \n\n where Ψ s , Ψ p , Ψ g , and Ψ m refer to the solute, pressure, gravity, and matric potentials, respectively. “System” can refer to the water potential of the soil water (Ψ soil ), root water (Ψ root ), stem water (Ψ stem ), leaf water (Ψ leaf ) or the water in the atmosphere (Ψ atmosphere ): whichever aqueous system is under consideration. As the individual components change, they raise or lower the total water potential of a system. When this happens, water moves to equilibrate, moving from the system or compartment with a higher water potential to the system or compartment with a lower water potential. This brings the difference in water potential between the two systems (ΔΨ) back to zero (ΔΨ = 0). Therefore, for water to move through the plant from the soil to the air (a process called transpiration), Ψ soil must be > Ψ root > Ψ stem > Ψ leaf > Ψ atmosphere . \n\n Water only moves in response to ΔΨ, not in response to the individual components. However, because the individual components influence the total Ψ system , by manipulating the individual components (especially Ψ s ), a plant can control water movement. \n\n Solute Potential \n\n Solute potential (Ψ s ), also called osmotic potential, is negative in a plant cell and zero in distilled water. Typical values for cell cytoplasm are –0.5 to –1.0 MPa. Solutes reduce water potential (resulting in a negative Ψ w ) by consuming some of the potential energy available in the water. Solute molecules can dissolve in water because water molecules can bind to them via hydrogen bonds; a hydrophobic molecule like oil, which cannot bind to water, cannot go into solution. The energy in the hydrogen bonds between solute molecules and water is no longer available to do work in the system because it is tied up in the bond. In other words, the amount of available potential energy is reduced when solutes are added to an aqueous system. Thus, Ψ s decreases with increasing solute concentration. Because Ψ s is one of the four components of Ψ system or Ψ total , a decrease in Ψ s will cause a decrease in Ψ total . The internal water potential of a plant cell is more negative than pure water because of the cytoplasm’s high solute content ( Figure 30.32 ). Because of this difference in water potential water will move from the soil into a plant’s root cells via the process of osmosis. This is why solute potential is sometimes called osmotic potential. Plant cells can metabolically manipulate Ψ s (and by extension, Ψ total ) by adding or removing solute molecules. Therefore, plants have control over Ψ total via their ability to exert metabolic control over Ψ s . \n\n Visual Connection \n\n Positive water potential is placed on the left side of the tube by increasing Ψ p such that the water level rises on the right side. Could you equalize the water level on each side of the tube by adding solute, and if so, how? \n\n Pressure Potential \n\n Pressure potential (Ψ p ), also called turgor potential, may be positive or negative ( Figure 30.32 ). Because pressure is an expression of energy, the higher the pressure, the more potential energy in a system, and vice versa. Therefore, a positive Ψp (compression) increases Ψ total , and a negative Ψ p (tension) decreases Ψ total . Positive pressure inside cells is contained by the cell wall, producing turgor pressure. Pressure potentials are typically around 0.6–0.8 MPa, but can reach as high as 1.5 MPa in a well-watered plant. A Ψ p of 1.5 MPa equates to 210 pounds per square inch (1.5 MPa x 140 lb in -2 MPa -1 = 210 lb/in -2 ). As a comparison, most automobile tires are kept at a pressure of 30–34 psi. An example of the effect of turgor pressure is the wilting of leaves and their restoration after the plant has been watered ( Figure 30.33 ). Water is lost from the leaves via transpiration (approaching Ψ p = 0 MPa at the wilting point) and restored by uptake via the roots. A plant can manipulate Ψ p via its ability to manipulate Ψ s and by the process of osmosis. If a plant cell increases the cytoplasmic solute concentration, Ψ s will decline, Ψ total will decline, the ΔΨ between the cell and the surrounding tissue will decline, water will move into the cell by osmosis, and Ψ p will increase. Ψ p is also under indirect plant control via the opening and closing of stomata. Stomatal openings allow water to evaporate from the leaf, reducing Ψ p and Ψ total of the leaf and increasing ii between the water in the leaf and the petiole, thereby allowing water to flow from the petiole into the leaf. \n\n Gravity Potential \n\n Gravity potential (Ψ g ) is always negative to zero in a plant with no height. It always removes or consumes potential energy from the system. The force of gravity pulls water downwards to the soil, reducing the total amount of potential energy in the water in the plant (Ψ total ). The taller the plant, the taller the water column, and the more influential Ψ g becomes. On a cellular scale and in short plants, this effect is negligible and easily ignored. However, over the height of a tall tree like a giant coastal redwood, the gravitational pull of –0.1 MPa m -1 is equivalent to an extra 1 MPa of resistance that must be overcome for water to reach the leaves of the tallest trees. Plants are unable to manipulate Ψ g . \n\n Matric Potential Matric potential (Ψ m ) is always negative to zero. In a dry system, it can be as low as –2 MPa in a dry seed, and it is zero in a water-saturated system. The binding of water to a matrix always removes or consumes potential energy from the system. Ψ m is similar to solute potential because it involves tying up the energy in an aqueous system by forming hydrogen bonds between the water and some other component. However, in solute potential, the other components are soluble, hydrophilic solute molecules, whereas in Ψ m , the other components are insoluble, hydrophilic molecules of the plant cell wall. Every plant cell has a cellulosic cell wall and the cellulose in the cell walls is hydrophilic, producing a matrix for adhesion of water: hence the name matric potential. Ψ m is very large (negative) in dry tissues such as seeds or drought-affected soils. However, it quickly goes to zero as the seed takes up water or the soil hydrates. Ψ m cannot be manipulated by the plant and is typically ignored in well-watered roots, stems, and leaves. \n\n Movement of Water and Minerals in the Xylem \n\n Solutes, pressure, gravity, and matric potential are all important for the transport of water in plants. Water moves from an area of higher total water potential (higher Gibbs free energy) to an area of lower total water potential. Gibbs free energy is the energy associated with a chemical reaction that can be used to do work. This is expressed as ΔΨ. \n\n Transpiration is the loss of water from the plant through evaporation at the leaf surface. It is the main driver of water movement in the xylem. Transpiration is caused by the evaporation of water at the leaf–atmosphere interface; it creates negative pressure (tension) equivalent to –2 MPa at the leaf surface. This value varies greatly depending on the vapor pressure deficit, which can be negligible at high relative humidity (RH) and substantial at low RH. Water from the roots is pulled up by this tension. At night, when stomata shut and transpiration stops, the water is held in the stem and leaf by the adhesion of water to the cell walls of the xylem vessels and tracheids, and the cohesion of water molecules to each other. This is called the cohesion–tension theory of sap ascent. \n\n Inside the leaf at the cellular level, water on the surface of mesophyll cells saturates the cellulose microfibrils of the primary cell wall. The leaf contains many large intercellular air spaces for the exchange of oxygen for carbon dioxide, which is required for photosynthesis. The wet cell wall is exposed to this leaf internal air space, and the water on the surface of the cells evaporates into the air spaces, decreasing the thin film on the surface of the mesophyll cells. This decrease creates a greater tension on the water in the mesophyll cells ( Figure 30.34 ), thereby increasing the pull on the water in the xylem vessels. The xylem vessels and tracheids are structurally adapted to cope with large changes in pressure. Rings in the vessels maintain their tubular shape, much like the rings on a vacuum cleaner hose keep the hose open while it is under pressure. Small perforations between vessel elements reduce the number and size of gas bubbles that can form via a process called cavitation. The formation of gas bubbles in xylem interrupts the continuous stream of water from the base to the top of the plant, causing a break termed an embolism in the flow of xylem sap. The taller the tree, the greater the tension forces needed to pull water, and the more cavitation events. In larger trees, the resulting embolisms can plug xylem vessels, making them non-functional. \n\n Visual Connection \n\n Which of the following statements is false? \n\n Negative water potential draws water into the root hairs. Cohesion and adhesion draw water up the xylem. Transpiration draws water from the leaf. \n\n Negative water potential draws water into the root hairs. Cohesion and adhesion draw water up the phloem. Transpiration draws water from the leaf. \n\n Water potential decreases from the roots to the top of the plant. \n\n Water enters the plants through root hairs and exits through stoma. \n\n Transpiration —the loss of water vapor to the atmosphere through stomata—is a passive process, meaning that metabolic energy in the form of ATP is not required for water movement. The energy driving transpiration is the difference in energy between the water in the soil and the water in the atmosphere. However, transpiration is tightly controlled. \n\n Control of Transpiration \n\n The atmosphere to which the leaf is exposed drives transpiration, but also causes massive water loss from the plant. Up to 90 percent of the water taken up by roots may be lost through transpiration. \n\n Leaves are covered by a waxy cuticle on the outer surface that prevents the loss of water. Regulation of transpiration, therefore, is achieved primarily through the opening and closing of stomata on the leaf surface. Stomata are surrounded by two specialized cells called guard cells, which open and close in response to environmental cues such as light intensity and quality, leaf water status, and carbon dioxide concentrations. Stomata must open to allow air containing carbon dioxide and oxygen to diffuse into the leaf for photosynthesis and respiration. When stomata are open, however, water vapor is lost to the external environment, increasing the rate of transpiration. Therefore, plants must maintain a balance between efficient photosynthesis and water loss. \n\n Plants have evolved over time to adapt to their local environment and reduce transpiration( Figure 30.35 ). Desert plant (xerophytes) and plants that grow on other plants (epiphytes) have limited access to water. Such plants usually have a much thicker waxy cuticle than those growing in more moderate, well-watered environments (mesophytes). Aquatic plants (hydrophytes) also have their own set of anatomical and morphological leaf adaptations. \n\n Xerophytes and epiphytes often have a thick covering of trichomes or of stomata that are sunken below the leaf’s surface. Trichomes are specialized hair-like epidermal cells that secrete oils and substances. These adaptations impede air flow across the stomatal pore and reduce transpiration. Multiple epidermal layers are also commonly found in these types of plants. \n\n Transportation of Photosynthates in the Phloem \n\n Plants need an energy source to grow. In seeds and bulbs, food is stored in polymers (such as starch) that are converted by metabolic processes into sucrose for newly developing plants. Once green shoots and leaves are growing, plants are able to produce their own food by photosynthesizing. The products of photosynthesis are called photosynthates, which are usually in the form of simple sugars such as sucrose. \n\n Structures that produce photosynthates for the growing plant are referred to as sources . Sugars produced in sources, such as leaves, need to be delivered to growing parts of the plant via the phloem in a process called translocation . The points of sugar delivery, such as roots, young shoots, and developing seeds, are called sinks . Seeds, tubers, and bulbs can be either a source or a sink, depending on the plant’s stage of development and the season. \n\n The products from the source are usually translocated to the nearest sink through the phloem. For example, the highest leaves will send photosynthates upward to the growing shoot tip, whereas lower leaves will direct photosynthates downward to the roots. Intermediate leaves will send products in both directions, unlike the flow in the xylem, which is always unidirectional (soil to leaf to atmosphere). The pattern of photosynthate flow changes as the plant grows and develops. Photosynthates are directed primarily to the roots early on, to shoots and leaves during vegetative growth, and to seeds and fruits during reproductive development. They are also directed to tubers for storage. \n\n Translocation: Transport from Source to Sink \n\n Photosynthates, such as sucrose, are produced in the mesophyll cells of photosynthesizing leaves. From there they are translocated through the phloem to where they are used or stored. Mesophyll cells are connected by cytoplasmic channels called plasmodesmata. Photosynthates move through these channels to reach phloem sieve-tube elements (STEs) in the vascular bundles. From the mesophyll cells, the photosynthates are loaded into the phloem STEs. The sucrose is actively transported against its concentration gradient (a process requiring ATP) into the phloem cells using the electrochemical potential of the proton gradient. This is coupled to the uptake of sucrose with a carrier protein called the sucrose-H + symporter. Phloem STEs have reduced cytoplasmic contents, and are connected by a sieve plate with pores that allow for pressure-driven bulk flow, or translocation, of phloem sap. Companion cells are associated with STEs. They assist with metabolic activities and produce energy for the STEs ( Figure 30.36 ). \n\n Once in the phloem, the photosynthates are translocated to the closest sink. Phloem sap is an aqueous solution that contains up to 30 percent sugar, minerals, amino acids, and plant growth regulators. The high percentage of sugar decreases Ψ s, which decreases the total water potential and causes water to move by osmosis from the adjacent xylem into the phloem tubes, thereby increasing pressure. This increase in total water potential causes the bulk flow of phloem from source to sink ( Figure 30.37 ). Sucrose concentration in the sink cells is lower than in the phloem STEs because the sink sucrose has been metabolized for growth, or converted to starch for storage or other polymers, such as cellulose, for structural integrity. Unloading at the sink end of the phloem tube occurs by either diffusion or active transport of sucrose molecules from an area of high concentration to one of low concentration. Water diffuses from the phloem by osmosis and is then transpired or recycled via the xylem back into the phloem sap. \n30.6 Plant Sensory Systems and Responses Learning Objectives By the end of this section, you will be able to:\n\n Describe how red and blue light affect plant growth and metabolic activities \n\n Discuss gravitropism \n\n Understand how hormones affect plant growth and development \n\n Describe thigmotropism, thigmonastism, and thigmogenesis \n\n Explain how plants defend themselves from predators and respond to wounds \n\n Animals can respond to environmental factors by moving to a new location. Plants, however, are rooted in place and must respond to the surrounding environmental factors. Plants have sophisticated systems to detect and respond to light, gravity, temperature, and physical touch. Receptors sense environmental factors and relay the information to effector systems—often through intermediate chemical messengers—to bring about plant responses. \n\n Plant Responses to Light \n\n Plants have a number of sophisticated uses for light that go far beyond their ability to photosynthesize low-molecular-weight sugars using only carbon dioxide, light, and water. Photomorphogenesis is the growth and development of plants in response to light. It allows plants to optimize their use of light and space. Photoperiodism is the ability to use light to track time. Plants can tell the time of day and time of year by sensing and using various wavelengths of sunlight. Phototropism is a directional response that allows plants to grow towards, or even away from, light. \n\n The sensing of light in the environment is important to plants; it can be crucial for competition and survival. The response of plants to light is mediated by different photoreceptors, which are comprised of a protein covalently bonded to a light-absorbing pigment called a chromophore . Together, the two are called a chromoprotein. \n\n The red/far-red and violet-blue regions of the visible light spectrum trigger structural development in plants. Sensory photoreceptors absorb light in these particular regions of the visible light spectrum because of the quality of light available in the daylight spectrum. In terrestrial habitats, light absorption by chlorophylls peaks in the blue and red regions of the spectrum. As light filters through the canopy and the blue and red wavelengths are absorbed, the spectrum shifts to the far-red end, shifting the plant community to those plants better adapted to respond to far-red light. Blue-light receptors allow plants to gauge the direction and abundance of sunlight, which is rich in blue–green emissions. Water absorbs red light, which makes the detection of blue light essential for algae and aquatic plants. \n\n The Phytochrome System and the Red/Far-Red Response \n\n The phytochromes are a family of chromoproteins with a linear tetrapyrrole chromophore, similar to the ringed tetrapyrrole light-absorbing head group of chlorophyll. Phytochromes have two photo-interconvertible forms: Pr and Pfr. Pr absorbs red light (~667 nm) and is immediately converted to Pfr. Pfr absorbs far-red light (~730 nm) and is quickly converted back to Pr. Absorption of red or far-red light causes a massive change to the shape of the chromophore, altering the conformation and activity of the phytochrome protein to which it is bound. Pfr is the physiologically active form of the protein; therefore, exposure to red light yields physiological activity. Exposure to far-red light inhibits phytochrome activity. Together, the two forms represent the phytochrome system ( Figure 30.38 ). \n\n The phytochrome system acts as a biological light switch. It monitors the level, intensity, duration, and color of environmental light. The effect of red light is reversible by immediately shining far-red light on the sample, which converts the chromoprotein to the inactive Pr form. Additionally, Pfr can slowly revert to Pr in the dark, or break down over time. In all instances, the physiological response induced by red light is reversed. The active form of phytochrome (Pfr) can directly activate other molecules in the cytoplasm, or it can be trafficked to the nucleus, where it directly activates or represses specific gene expression. \n\n Once the phytochrome system evolved, plants adapted it to serve a variety of needs. Unfiltered, full sunlight contains much more red light than far-red light. Because chlorophyll absorbs strongly in the red region of the visible spectrum, but not in the far-red region, any plant in the shade of another plant on the forest floor will be exposed to red-depleted, far-red-enriched light. The preponderance of far-red light converts phytochrome in the shaded leaves to the Pr (inactive) form, slowing growth. The nearest non-shaded (or even less-shaded) areas on the forest floor have more red light; leaves exposed to these areas sense the red light, which activates the Pfr form and induces growth. In short, plant shoots use the phytochrome system to grow away from shade and towards light. Because competition for light is so fierce in a dense plant community, the evolutionary advantages of the phytochrome system are obvious. \n\n In seeds, the phytochrome system is not used to determine direction and quality of light (shaded versus unshaded). Instead, is it used merely to determine if there is any light at all. This is especially important in species with very small seeds, such as lettuce. Because of their size, lettuce seeds have few food reserves. Their seedlings cannot grow for long before they run out of fuel. If they germinated even a centimeter under the soil surface, the seedling would never make it into the sunlight and would die. In the dark, phytochrome is in the Pr (inactive form) and the seed will not germinate; it will only germinate if exposed to light at the surface of the soil. Upon exposure to light, Pr is converted to Pfr and germination proceeds. \n\n Plants also use the phytochrome system to sense the change of season. Photoperiodism is a biological response to the timing and duration of day and night. It controls flowering, setting of winter buds, and vegetative growth. Detection of seasonal changes is crucial to plant survival. Although temperature and light intensity influence plant growth, they are not reliable indicators of season because they may vary from one year to the next. Day length is a better indicator of the time of year. As stated above, unfiltered sunlight is rich in red light but deficient in far-red light. Therefore, at dawn, all the phytochrome molecules in a leaf quickly convert to the active Pfr form, and remain in that form until sunset. In the dark, the Pfr form takes hours to slowly revert back to the Pr form. If the night is long (as in winter), all of the Pfr form reverts. If the night is short (as in summer), a considerable amount of Pfr may remain at sunrise. By sensing the Pr/Pfr ratio at dawn, a plant can determine the length of the day/night cycle. In addition, leaves retain that information for several days, allowing a comparison between the length of the previous night and the preceding several nights. Shorter nights indicate springtime to the plant; when the nights become longer, autumn is approaching. This information, along with sensing temperature and water availability, allows plants to determine the time of the year and adjust their physiology accordingly. Short-day (long-night) plants use this information to flower in the late summer and early fall, when nights exceed a critical length (often eight or fewer hours). Long-day (short-night) plants flower during the spring, when darkness is less than a critical length (often eight to 15 hours). Not all plants use the phytochrome system in this way. Flowering in day-neutral plants is not regulated by daylength. \n\n Career Connection Horticulturalist \n\n The word “horticulturist” comes from the Latin words for garden ( hortus ) and culture ( cultura ). This career has been revolutionized by progress made in the understanding of plant responses to environmental stimuli. Growers of crops, fruit, vegetables, and flowers were previously constrained by having to time their sowing and harvesting according to the season. Now, horticulturists can manipulate plants to increase leaf, flower, or fruit production by understanding how environmental factors affect plant growth and development. \n\n Greenhouse management is an essential component of a horticulturist’s education. To lengthen the night, plants are covered with a blackout shade cloth. Long-day plants are irradiated with red light in winter to promote early flowering. For example, fluorescent (cool white) light high in blue wavelengths encourages leafy growth and is excellent for starting seedlings. Incandescent lamps (standard light bulbs) are rich in red light, and promote flowering in some plants. The timing of fruit ripening can be increased or delayed by applying plant hormones. Recently, considerable progress has been made in the development of plant breeds that are suited to different climates and resistant to pests and transportation damage. Both crop yield and quality have increased as a result of practical applications of the knowledge of plant responses to external stimuli and hormones. \n\n Horticulturists find employment in private and governmental laboratories, greenhouses, botanical gardens, and in the production or research fields. They improve crops by applying their knowledge of genetics and plant physiology. To prepare for a horticulture career, students take classes in botany, plant physiology, plant pathology, landscape design, and plant breeding. To complement these traditional courses, horticulture majors add studies in economics, business, computer science, and communications. \n\n The Blue Light Responses \n\n Phototropism—the directional bending of a plant toward or away from a light source—is a response to blue wavelengths of light. Positive phototropism is growth towards a light source ( Figure 30.39 ), while negative phototropism (also called skototropism) is growth away from light. \n\n The aptly-named phototropins are protein-based receptors responsible for mediating the phototropic response. Like all plant photoreceptors, phototropins consist of a protein portion and a light-absorbing portion, called the chromophore. In phototropins, the chromophore is a covalently-bound molecule of flavin; hence, phototropins belong to a class of proteins called flavoproteins. \n\n Other responses under the control of phototropins are leaf opening and closing, chloroplast movement, and the opening of stomata. However, of all responses controlled by phototropins, phototropism has been studied the longest and is the best understood. \n\n In their 1880 treatise The Power of Movements in Plants , Charles Darwin and his son Francis first described phototropism as the bending of seedlings toward light. Darwin observed that light was perceived by the tip of the plant (the apical meristem), but that the response (bending) took place in a different part of the plant. They concluded that the signal had to travel from the apical meristem to the base of the plant. \n\n In 1913, Peter Boysen-Jensen demonstrated that a chemical signal produced in the plant tip was responsible for the bending at the base. He cut off the tip of a seedling, covered the cut section with a layer of gelatin, and then replaced the tip. The seedling bent toward the light when illuminated. However, when impermeable mica flakes were inserted between the tip and the cut base, the seedling did not bend. A refinement of the experiment showed that the signal traveled on the shaded side of the seedling. When the mica plate was inserted on the illuminated side, the plant did bend towards the light. Therefore, the chemical signal was a growth stimulant because the phototropic response involved faster cell elongation on the shaded side than on the illuminated side. We now know that as light passes through a plant stem, it is diffracted and generates phototropin activation across the stem. Most activation occurs on the lit side, causing the plant hormone indole acetic acid (IAA) to accumulate on the shaded side. Stem cells elongate under influence of IAA. Cryptochromes are another class of blue-light absorbing photoreceptors that also contain a flavin-based chromophore. Cryptochromes set the plants 24-hour activity cycle, also know as its circadian rhythem, using blue light cues. There is some evidence that cryptochromes work together with phototropins to mediate the phototropic response. Link to Learning \n\n Use the navigation menu in the left panel of this website to view images of plants in motion. \n\n Plant Responses to Gravity \n\n Whether or not they germinate in the light or in total darkness, shoots usually sprout up from the ground, and roots grow downward into the ground. A plant laid on its side in the dark will send shoots upward when given enough time. Gravitropism ensures that roots grow into the soil and that shoots grow toward sunlight. Growth of the shoot apical tip upward is called negative gravitropism , whereas growth of the roots downward is called positive gravitropism . \n\n Amyloplasts (also known as statoliths ) are specialized plastids that contain starch granules and settle downward in response to gravity. Amyloplasts are found in shoots and in specialized cells of the root cap. When a plant is tilted, the statoliths drop to the new bottom cell wall. A few hours later, the shoot or root will show growth in the new vertical direction. \n\n The mechanism that mediates gravitropism is reasonably well understood. When amyloplasts settle to the bottom of the gravity-sensing cells in the root or shoot, they physically contact the endoplasmic reticulum (ER), causing the release of calcium ions from inside the ER. This calcium signaling in the cells causes polar transport of the plant hormone IAA to the bottom of the cell. In roots, a high concentration of IAA inhibits cell elongation. The effect slows growth on the lower side of the root, while cells develop normally on the upper side. IAA has the opposite effect in shoots, where a higher concentration at the lower side of the shoot stimulates cell expansion, causing the shoot to grow up. After the shoot or root begin to grow vertically, the amyloplasts return to their normal position. Other hypotheses—involving the entire cell in the gravitropism effect—have been proposed to explain why some mutants that lack amyloplasts may still exhibit a weak gravitropic response. \n\n Growth Responses \n\n A plant’s sensory response to external stimuli relies on chemical messengers (hormones). Plant hormones affect all aspects of plant life, from flowering to fruit setting and maturation, and from phototropism to leaf fall. Potentially every cell in a plant can produce plant hormones. They can act in their cell of origin or be transported to other portions of the plant body, with many plant responses involving the synergistic or antagonistic interaction of two or more hormones. In contrast, animal hormones are produced in specific glands and transported to a distant site for action, and they act alone. \n\n Plant hormones are a group of unrelated chemical substances that affect plant morphogenesis. Five major plant hormones are traditionally described: auxins (particularly IAA), cytokinins, gibberellins, ethylene, and abscisic acid. In addition, other nutrients and environmental conditions can be characterized as growth factors. \n\n Auxins \n\n The term auxin is derived from the Greek word auxein , which means \"to grow.\" Auxins are the main hormones responsible for cell elongation in phototropism and gravitropism. They also control the differentiation of meristem into vascular tissue, and promote leaf development and arrangement. While many synthetic auxins are used as herbicides, IAA is the only naturally occurring auxin that shows physiological activity. Apical dominance—the inhibition of lateral bud formation—is triggered by auxins produced in the apical meristem. Flowering, fruit setting and ripening, and inhibition of abscission (leaf falling) are other plant responses under the direct or indirect control of auxins. Auxins also act as a relay for the effects of the blue light and red/far-red responses. \n\n Commercial use of auxins is widespread in plant nurseries and for crop production. IAA is used as a rooting hormone to promote growth of adventitious roots on cuttings and detached leaves. Applying synthetic auxins to tomato plants in greenhouses promotes normal fruit development. Outdoor application of auxin promotes synchronization of fruit setting and dropping to coordinate the harvesting season. Fruits such as seedless cucumbers can be induced to set fruit by treating unfertilized plant flowers with auxins. \n\n Cytokinins \n\n The effect of cytokinins was first reported when it was found that adding the liquid endosperm of coconuts to developing plant embryos in culture stimulated their growth. The stimulating growth factor was found to be cytokinin , a hormone that promotes cytokinesis (cell division). Almost 200 naturally occurring or synthetic cytokinins are known to date. Cytokinins are most abundant in growing tissues, such as roots, embryos, and fruits, where cell division is occurring. Cytokinins are known to delay senescence in leaf tissues, promote mitosis, and stimulate differentiation of the meristem in shoots and roots. Many effects on plant development are under the influence of cytokinins, either in conjunction with auxin or another hormone. For example, apical dominance seems to result from a balance between auxins that inhibit lateral buds, and cytokinins that promote bushier growth. \n\n Gibberellins \n\n Gibberellins (GAs) are a group of about 125 closely related plant hormones that stimulate shoot elongation, seed germination, and fruit and flower maturation. GAs are synthesized in the root and stem apical meristems, young leaves, and seed embryos. In urban areas, GA antagonists are sometimes applied to trees under power lines to control growth and reduce the frequency of pruning. \n\n GAs break dormancy (a state of inhibited growth and development) in the seeds of plants that require exposure to cold or light to germinate. Abscisic acid is a strong antagonist of GA action. Other effects of GAs include gender expression, seedless fruit development, and the delay of senescence in leaves and fruit. Seedless grapes are obtained through standard breeding methods and contain inconspicuous seeds that fail to develop. Because GAs are produced by the seeds, and because fruit development and stem elongation are under GA control, these varieties of grapes would normally produce small fruit in compact clusters. Maturing grapes are routinely treated with GA to promote larger fruit size, as well as looser bunches (longer stems), which reduces the instance of mildew infection ( Figure 30.40 ). \n\n Abscisic Acid \n\n The plant hormone abscisic acid (ABA) was first discovered as the agent that causes the abscission or dropping of cotton bolls. However, more recent studies indicate that ABA plays only a minor role in the abscission process. ABA accumulates as a response to stressful environmental conditions, such as dehydration, cold temperatures, or shortened day lengths. Its activity counters many of the growth-promoting effects of GAs and auxins. ABA inhibits stem elongation and induces dormancy in lateral buds. \n\n ABA induces dormancy in seeds by blocking germination and promoting the synthesis of storage proteins. Plants adapted to temperate climates require a long period of cold temperature before seeds germinate. This mechanism protects young plants from sprouting too early during unseasonably warm weather in winter. As the hormone gradually breaks down over winter, the seed is released from dormancy and germinates when conditions are favorable in spring. Another effect of ABA is to promote the development of winter buds; it mediates the conversion of the apical meristem into a dormant bud. Low soil moisture causes an increase in ABA, which causes stomata to close, reducing water loss in winter buds. \n\n Ethylene \n\n Ethylene is associated with fruit ripening, flower wilting, and leaf fall. Ethylene is unusual because it is a volatile gas (C 2 H 4 ). Hundreds of years ago, when gas street lamps were installed in city streets, trees that grew close to lamp posts developed twisted, thickened trunks and shed their leaves earlier than expected. These effects were caused by ethylene volatilizing from the lamps. \n\n Aging tissues (especially senescing leaves) and nodes of stems produce ethylene. The best-known effect of the hormone, however, is the promotion of fruit ripening. Ethylene stimulates the conversion of starch and acids to sugars. Some people store unripe fruit, such as avocadoes, in a sealed paper bag to accelerate ripening; the gas released by the first fruit to mature will speed up the maturation of the remaining fruit. Ethylene also triggers leaf and fruit abscission, flower fading and dropping, and promotes germination in some cereals and sprouting of bulbs and potatoes. \n\n Ethylene is widely used in agriculture. Commercial fruit growers control the timing of fruit ripening with application of the gas. Horticulturalists inhibit leaf dropping in ornamental plants by removing ethylene from greenhouses using fans and ventilation. \n\n Nontraditional Hormones \n\n Recent research has discovered a number of compounds that also influence plant development. Their roles are less understood than the effects of the major hormones described so far. \n\n Jasmonates play a major role in defense responses to herbivory. Their levels increase when a plant is wounded by a predator, resulting in an increase in toxic secondary metabolites. They contribute to the production of volatile compounds that attract natural enemies of predators. For example, chewing of tomato plants by caterpillars leads to an increase in jasmonic acid levels, which in turn triggers the release of volatile compounds that attract predators of the pest. \n\n Oligosaccharins also play a role in plant defense against bacterial and fungal infections. They act locally at the site of injury, and can also be transported to other tissues. Strigolactones promote seed germination in some species and inhibit lateral apical development in the absence of auxins. Strigolactones also play a role in the establishment of mycorrhizae, a mutualistic association of plant roots and fungi. Brassinosteroids are important to many developmental and physiological processes. Signals between these compounds and other hormones, notably auxin and GAs, amplifies their physiological effect. Apical dominance, seed germination, gravitropism, and resistance to freezing are all positively influenced by hormones. Root growth and fruit dropping are inhibited by steroids. \n\n Plant Responses to Wind and Touch \n\n The shoot of a pea plant winds around a trellis, while a tree grows on an angle in response to strong prevailing winds. These are examples of how plants respond to touch or wind. \n\n The movement of a plant subjected to constant directional pressure is called thigmotropism , from the Greek words thigma meaning “touch,” and tropism implying “direction.” Tendrils are one example of this. The meristematic region of tendrils is very touch sensitive; light touch will evoke a quick coiling response. Cells in contact with a support surface contract, whereas cells on the opposite side of the support expand ( Figure 30.14 ). Application of jasmonic acid is sufficient to trigger tendril coiling without a mechanical stimulus. A thigmonastic response is a touch response independent of the direction of stimulus Figure 30.24 . In the Venus flytrap, two modified leaves are joined at a hinge and lined with thin fork-like tines along the outer edges. Tiny hairs are located inside the trap. When an insect brushes against these trigger hairs, touching two or more of them in succession, the leaves close quickly, trapping the prey. Glands on the leaf surface secrete enzymes that slowly digest the insect. The released nutrients are absorbed by the leaves, which reopen for the next meal. Thigmomorphogenesis is a slow developmental change in the shape of a plant subjected to continuous mechanical stress. When trees bend in the wind, for example, growth is usually stunted and the trunk thickens. Strengthening tissue, especially xylem, is produced to add stiffness to resist the wind’s force. Researchers hypothesize that mechanical strain induces growth and differentiation to strengthen the tissues. Ethylene and jasmonate are likely involved in thigmomorphogenesis. \n\n Link to Learning \n\n Use the menu at the left to navigate to three short movies: a Venus fly trap capturing prey, the progressive closing of sensitive plant leaflets, and the twining of tendrils. \n\n Defense Responses against Herbivores and Pathogens \n\n Plants face two types of enemies: herbivores and pathogens. Herbivores both large and small use plants as food, and actively chew them. Pathogens are agents of disease. These infectious microorganisms, such as fungi, bacteria, and nematodes, live off of the plant and damage its tissues. Plants have developed a variety of strategies to discourage or kill attackers. \n\n The first line of defense in plants is an intact and impenetrable barrier. Bark and the waxy cuticle can protect against predators. Other adaptations against herbivory include thorns, which are modified branches, and spines, which are modified leaves. They discourage animals by causing physical damage and inducing rashes and allergic reactions. A plant’s exterior protection can be compromised by mechanical damage, which may provide an entry point for pathogens. If the first line of defense is breached, the plant must resort to a different set of defense mechanisms, such as toxins and enzymes. \n\n Secondary metabolites are compounds that are not directly derived from photosynthesis and are not necessary for respiration or plant growth and development. Many metabolites are toxic, and can even be lethal to animals that ingest them. Some metabolites are alkaloids, which discourage predators with noxious odors (such as the volatile oils of mint and sage) or repellent tastes (like the bitterness of quinine). Other alkaloids affect herbivores by causing either excessive stimulation (caffeine is one example) or the lethargy associated with opioids. Some compounds become toxic after ingestion; for instance, glycol cyanide in the cassava root releases cyanide only upon ingestion by the herbivore. \n\n Mechanical wounding and predator attacks activate defense and protection mechanisms both in the damaged tissue and at sites farther from the injury location. Some defense reactions occur within minutes: others over several hours. The infected and surrounding cells may die, thereby stopping the spread of infection. \n\n Long-distance signaling elicits a systemic response aimed at deterring the predator. As tissue is damaged, jasmonates may promote the synthesis of compounds that are toxic to predators. Jasmonates also elicit the synthesis of volatile compounds that attract parasitoids, which are insects that spend their developing stages in or on another insect, and eventually kill their host. The plant may activate abscission of injured tissue if it is damaged beyond repair. "}}},{"rowIdx":76,"cells":{"bname":{"kind":"string","value":"u.s._history"},"keyterm":{"kind":"string","value":""},"summary":{"kind":"string","value":" Summary 23.1 American Isolationism and the European Origins of War \n\n President Wilson had no desire to embroil the United States in the bloody and lengthy war that was devastating Europe. His foreign policy, through his first term and his campaign for reelection, focused on keeping the United States out of the war and involving the country in international affairs only when there was a moral imperative to do so. After his 1916 reelection, however, the free trade associated with neutrality proved impossible to secure against the total war strategies of the belligerents, particularly Germany’s submarine warfare. Ethnic ties to Europe meant that much of the general public was more than happy to remain neutral. Wilson’s reluctance to go to war was mirrored in Congress, where fifty-six voted against the war resolution. The measure still passed, however, and the United States went to war against the wishes of many of its citizens. \n\n 23.2 The United States Prepares for War \n\n Wilson might have entered the war unwillingly, but once it became inevitable, he quickly moved to use federal legislation and government oversight to put into place the conditions for the nation’s success. First, he sought to ensure that all logistical needs—from fighting men to raw materials for wartime production—were in place and within government reach. From legislating rail service to encouraging Americans to buy liberty loans and “bring the boys home sooner,” the government worked to make sure that the conditions for success were in place. Then came the more nuanced challenge of ensuring that a country of immigrants from both sides of the conflict fell in line as Americans, first and foremost. Aggressive propaganda campaigns, combined with a series of restrictive laws to silence dissenters, ensured that Americans would either support the war or at least stay silent. While some conscientious objectors and others spoke out, the government efforts were largely successful in silencing those who had favored neutrality. \n\n 23.3 A New Home Front \n\n The First World War remade the world for all Americans, whether they served abroad or stayed at home. For some groups, such as women and Blacks, the war provided opportunities for advancement. As soldiers went to war, women and African Americans took on jobs that had previously been reserved for White men. In return for a no-strike pledge, workers gained the right to organize. Many of these shifts were temporary, however, and the end of the war came with a cultural expectation that the old social order would be reinstated. \n\n Some reform efforts also proved short-lived. President Wilson’s wartime agencies managed the wartime economy effectively but closed immediately with the end of the war (although they reappeared a short while later with the New Deal). While patriotic fervor allowed Progressives to pass prohibition, the strong demand for alcohol made the law unsustainable. Women’s suffrage, however, was a Progressive movement that came to fruition in part because of the circumstances of the war, and unlike prohibition, it remained. \n\n 23.4 From War to Peace \n\n American involvement in World War I came late. Compared to the incredible carnage endured by Europe, the United States’ battles were brief and successful, although the appalling fighting conditions and significant casualties made it feel otherwise to Americans, both at war and at home. For Wilson, victory in the fields of France was not followed by triumphs in Versailles or Washington, DC, where his vision of a new world order was summarily rejected by his allied counterparts and then by the U.S. Congress. Wilson had hoped that America’s political influence could steer the world to a place of more open and tempered international negotiations. His influence did lead to the creation of the League of Nations, but concerns at home impeded the process so completely that the United States never signed the treaty that Wilson worked so hard to create. \n\n 23.5 Demobilization and Its Difficult Aftermath \n\n The end of a successful war did not bring the kind of celebration the country craved or anticipated. The flu pandemic, economic troubles, and racial and ideological tensions combined to make the immediate postwar experience in the United States one of anxiety and discontent. As the 1920 presidential election neared, Americans made it clear that they were seeking a break from the harsh realities that the country had been forced to face through the previous years of Progressive mandates and war. By voting in President Warren G. Harding in a landslide election, Americans indicated their desire for a government that would leave them alone, keep taxes low, and limit social Progressivism and international intervention. "},"intro":{"kind":"string","value":" Chapter Outline 23.1 American Isolationism and the European Origins of War 23.2 The United States Prepares for War 23.3 A New Home Front 23.4 From War to Peace 23.5 Demobilization and Its Difficult Aftermath Introduction \n\n On the eve of World War I, the U.S. government under President Woodrow Wilson opposed any entanglement in international military conflicts. But as the war engulfed Europe and the belligerents’ total war strategies targeted commerce and travel across the Atlantic, it became clear that the United States would not be able to maintain its position of neutrality. Still, the American public was of mixed opinion; many resisted the idea of American intervention and American lives lost, no matter how bad the circumstances. \n\n In 1918, artist George Bellows created a series of paintings intended to strengthen public support for the war effort. His paintings depicted German war atrocities in explicit and expertly captured detail, from children run through with bayonets to torturers happily resting while their victims suffered. The image above, entitled Return of the Useless ( Figure 23.1 ), shows Germans unloading sick or disabled labor camp prisoners from a boxcar. These paintings, while not regarded as Bellows’ most important artistic work, were typical for anti-German propaganda at the time. The U.S. government sponsored much of this propaganda out of concern that many American immigrants sympathized with the Central powers and would not support the U.S. war effort. "},"questions":{"kind":"list like","value":[{"answer":{"ans_choice":2,"ans_text":"C"},"bloom":null,"hl_context":" Wilson appointed former presidential candidate William Jennings Bryan , a noted anti-imperialist and proponent of world peace , as his Secretary of State . Bryan undertook his new assignment with great vigor , encouraging nations around the world to sign “ cooling off treaties , ” under which they agreed to resolve international disputes through talks , not war , and to submit any grievances to an international commission . Bryan also negotiated friendly relations with Colombia , including a $ 25 million apology for Roosevelt ’ s actions during the Panamanian Revolution , and worked to establish effective self-government in the Philippines in preparation for the eventual American withdrawal . Even with Bryan ’ s support , however , Wilson found that it was much harder than he anticipated to keep the United States out of world affairs ( Figure 23.3 ) . In reality , the United States was interventionist in areas where its interests — direct or indirect — were threatened .","hl_sentences":"Wilson appointed former presidential candidate William Jennings Bryan , a noted anti-imperialist and proponent of world peace , as his Secretary of State .","question":{"cloze_format":"In order to pursue his goal of using American influence overseas only when it was a moral imperative, Wilson put ___ in the position of Secretary of State.","normal_format":"In order to pursue his goal of using American influence overseas only when it was a moral imperative, Wilson put which man in the position of Secretary of State?","question_choices":["Charles Hughes","Theodore Roosevelt","William Jennings Bryan","John Pershing"],"question_id":"eip-idp15018256","question_text":"In order to pursue his goal of using American influence overseas only when it was a moral imperative, Wilson put which man in the position of Secretary of State?"},"references_are_paraphrase":null},{"answer":{"ans_choice":1,"ans_text":"because they refused to warn their targets before firing"},"bloom":null,"hl_context":" One terrifying new piece of technological warfare was the German unterseeboot — an “ undersea boat ” or U-boat . By early 1915 , in an effort to break the British naval blockade of Germany and turn the tide of the war , the Germans dispatched a fleet of these submarines around Great Britain to attack both merchant and military ships . The U-boats acted in direct violation of international law , attacking without warning from beneath the water instead of surfacing and permitting the surrender of civilians or crew . By 1918 , German U-boats had sunk nearly five thousand vessels . Of greatest historical note was the attack on the British passenger ship , RMS Lusitania , on its way from New York to Liverpool on May 7 , 1915 . The German Embassy in the United States had announced that this ship would be subject to attack for its cargo of ammunition : an allegation that later proved accurate . Nonetheless , almost 1,200 civilians died in the attack , including 128 Americans . The attack horrified the world , galvanizing support in England and beyond for the war ( Figure 23.5 ) . This attack , more than any other event , would test President Wilson ’ s desire to stay out of what had been a largely European conflict .","hl_sentences":"One terrifying new piece of technological warfare was the German unterseeboot — an “ undersea boat ” or U-boat . The U-boats acted in direct violation of international law , attacking without warning from beneath the water instead of surfacing and permitting the surrender of civilians or crew .","question":{"cloze_format":"The German use of the unterseeboot considered to defy international law ___.","normal_format":"Why was the German use of the unterseeboot considered to defy international law?","question_choices":["because other countries did not have similar technology","because they refused to warn their targets before firing","because they constituted cruel and unusual methods","because no international consensus existed to employ submarine technology"],"question_id":"eip-idm3796896","question_text":"Why was the German use of the unterseeboot considered to defy international law?"},"references_are_paraphrase":null},{"answer":{"ans_choice":3,"ans_text":"the Sedition Act"},"bloom":null,"hl_context":" Wilson also created the War Industries Board , run by Bernard Baruch , to ensure adequate military supplies . The War Industries Board had the power to direct shipments of raw materials , as well as to control government contracts with private producers . Baruch used lucrative contracts with guaranteed profits to encourage several private firms to shift their production over to wartime materials . For those firms that refused to cooperate , Baruch ’ s government control over raw materials provided him with the necessary leverage to convince them to join the war effort , willingly or not . With the size of the army growing , the U . S . government next needed to ensure that there were adequate supplies — in particular food and fuel — for both the soldiers and the home front . Concerns over shortages led to the passage of the Lever Food and Fuel Control Act , which empowered the president to control the production , distribution , and price of all food products during the war effort . Using this law , Wilson created both a Fuel Administration and a Food Administration . The Fuel Administration , run by Harry Garfield , created the concept of “ fuel holidays , ” encouraging civilian Americans to do their part for the war effort by rationing fuel on certain days . Garfield also implemented “ daylight saving time ” for the first time in American history , shifting the clocks to allow more productive daylight hours . Herbert Hoover coordinated the Food Administration , and he too encouraged volunteer rationing by invoking patriotism . With the slogan “ food will win the war , ” Hoover encouraged “ Meatless Mondays , ” “ Wheatless Wednesdays , ” and other similar reductions , with the hope of rationing food for military use ( Figure 23.8 ) . To compose a fighting force , Congress passed the Selective Service Act in 1917 , which initially required all men aged twenty-one through thirty to register for the draft ( Figure 23.7 ) .