A+ Answers of the following Questions

Question 1
The most rigorous test of a firm's ability to pay its short-term obligations is its:
A. current ratio.
B. quick ratio.
C. debt-to-assets ratio.
D. times-interest-earned ratio.

Question 2
If the company's accounts receivable turnover is increasing, the average collection period:
A. is going up slightly.
B. is going down.
C. could be moving in either direction.
D. is going up by a significant amount

Question 3
In addition to comparison with industry ratios, it is also helpful to analyze ratios using:
A. trend analysis.
B. historical comparisons.
C. neither; only industry ratios provide valid comparisons.
D. both a and b.

Question 1 
As the compounding rate becomes lower and lower, the future value of inflows approaches:
A. 0.
B. the present value of the inflows.
C. infinity.
D. Need more information.

Question 2 
If you invest $8,000 at 12% interest, how much will you have in 7 years?
A. $18,016
B. $3,616
C. $17,688
D. $80,712

Question 3 
The concept of time value of money is important to financial decision making because:
A. it emphasizes earning a return on invested capital.
B. it recognizes that earning a return makes $1 worth more today than $1 received in the future.
C. it can be applied to future cash flows in order to compare different streams of income.
D. all of the above

Question 1
As the discount rate becomes higher and higher, the present value of inflows approaches:
A. 0.
B. minus infinity.
C. plus infinity.
D. Need more information.

Question 2
An annuity may be defined as:
A. a payment at a fixed interest rate.
B. a series of payments of unequal amount.
C. a series of yearly payments.
D. a series of consecutive payments of equal amounts.

Question 3
You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today?
A. Present value of an annuity of $1
B. Future value of an annuity
C. Present value of $1
D. Future value of $1

Question 1
As the interest rate increases, the present value of an amount to be received at the end of a fixed period:
A. increases.
B. decreases.
C. remains the same.
D. not enough information to tell

Question 2
As the time period until receipt increases, the present value of an amount at a fixed interest rate:
A. decreases.
B. remains the same.
C. increases.
D. not enough information to tell

Question 3
If you were to put $1,000 in the bank at 6% interest each year for the next ten years, which table would you use to find the ending balance in your account?
A. Present value of $1
B. Future value of $1
C. Present value of an annuity of $1
D. Future value of an annuity of $1

Question 1
The IF for the future value of an annuity is 4.5 at 10% for 4 years. If we wish to accumulate $8,000 by the end of 4 years, how much should the annual payments be?
A. $2,500
B. $2,000
C. $1,778
D. none of the above

Question 2
Mr. Blochirt is creating a college investment fund for his daughter. He will put in $850 per year for the next 15 years and expects to earn an 8% annual rate of return. How much money will his daughter have when she starts college?
A. $11,250
B. $12,263
C. $24,003
D. $23,079

Question 3
Mr. Nailor invests $5,000 in a certificate of deposit at his local bank. He receives annual interest of 8% for 7 years. How much interest will his investment earn during this time period?
A. $2,915
B. $3,570
C. $6,254
D. $8,570