1. Suppose the interest rate is 3.9%.

a. Having $650 today is equivalent to having what amount in one? year?

b. Having $650 in one year is equivalent to having what amount? today?

c. Which would you? prefer, $650 today or $ $650 in one? year?

Does your answer depend on when you need the? money? Why or why? not?

2. A firm creates a Special Purpose Entity to buy their accounts receivable. If it had not sold the receivables it would have taken out a short-term loan. The effect of selling the receivables is:

3. Companies are supposed to write-down value of assets if a permanent impairment of value occurs. If a company writes down its assets this year, the effect on: