1. If Harry would like to know how much to deposit at the end of each month for the next ten years so that he will have enough money saved to purchase a home in ten years time, what time value of money concept should he use for computations?
a. present value of a single sum (lump sum)
b. future value of annuity due
c. present value of an annuity ordinary annuity
d. future value of an ordinary annuity
2. Long term debt issued to pay off a short-term bank loan. Which of the following actions can a firm take to increase its current ratio?
a.) Issue short-term debt and use the proceeds to buy back long-term debt with a maturity of more than one year.
b.) Reduce the company's day's sales outstanding to the industry average and use the resulting cash savings to purchase plant and equipment.
c.) Use cash to purchase additional inventory.
d.) None of the statements above is correct.