If a firm has pledged its receivables and its inventory, then the best indicator of its short-term liquidity may be indicated by:
a. working capital.
b. current ratio.
c. acid-test.
d. cash ratio.
e. days' sales in receivables.
D
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Jennings Creations is considering an investment in a computer that is capable of producing various images that are useful in the production of commercial art. The computer would cost $20,000 and have an expected life of eight years. The computer is expected to generate additional annual net cash receipts (before-tax) of $6,000 per year. The computer will be depreciated according to the
straight-line method and the firm's marginal tax rate is 25 percent. Refer to Jennings Creations. What is the after-tax net present value of the proposed project (using a 16 percent discount rate)? Present value tables or a financial calculator are required. a. $2,261 b. $(454) c. $6,062 d. $(4,797)
The parol evidence rule means:
A) If a contract is in writing the court will not hear other evidence to interpret the terms of the contract B) If a contract is in writing the courts will accept other evidence to interpret the terms of the contract C) Most contracts have to be in writing to be valid D) if someone behaves in jail they can be released early E) Any evidence of earlier discussions that can help a court interpret a contract must be considered even if the terms are clear
If treasury shares are sold for less than their cost, the difference is recorded as a loss
Indicate whether the statement is true or false
A company has four projects it wishes to undertake. Which of these investments should be the lowest priority, given a discount rate of 5%?
Project Capital Investment Cash Flows from Investment I $7 million $1.2 million per year in perpetuity II $12 million $1.5 million per year in perpetuity III $16 million $2.2 million per year in perpetuity IV $10 million $1.4 million per year in perpetuity A) Project I B) Project II C) Project III D) Project IV