1. Which one of the following will increase net working capital? assume the current ratio is positive.

a. using cash to pay an accounts payable.

b. using cash to pay a long-term debt.

c. selling inventory cost

d. collecting an accounts receivable.

e. using a long-term loan to buy inventory

2. Five years ago Constellation, Inc., sold an issue of 20-year $1000 par bonds to finance a new distribution terminal. The bonds pay 7.0% interest, semi-annually. Today’s required rate of return for similarly rated bonds is 6.7%. How much should these bonds sell for today? (Round off to the nearest $1.)

a) $650

b) $862

c) $1,028

d) $1,208

e) $1,375