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Multiple choice

Darlene wishes to accumulate \$50,000 by the end of 10 years by making
Equal annual end-of-the year deposits over the next 10 years. If Darlene
Can earn 5 percent on her investments, how much must she deposit at the
end of each year?
a. \$3,975
b. \$6,475
c. \$5,000
d. \$4,513

A corporation is considering expanding operations to meet growing
demand. With the capital expansion, the current accounts are expected to
change. Management expects cash to increase by \$20,000, accounts
receivable by \$40,000, and inventories by \$60,000. At the same time
accounts payable will increase by \$50,000, accruals by \$10,000, and
long-term debt by \$100.000. The change in networking capital is
a. an increase of \$120,000
b. a decrease of \$ 40,000
c. a decrease of \$120,000
d. an increase of \$ 60,000

Solution Preview

1. The amount to deposit would be such that the future value is \$50,000. The amount deposited is an annuity. We use the FVIFA table to get the FV factor. ...

Solution Summary

The solution explains two multiple choice questions relating to finance

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