1. Based on the following data for the current year, what is the number of days' sales in accounts receivable? Net sales on account during year $584,000 Cost of merchandise sold during year 300,000 Accounts receivable, beginning of year 45,000 Accounts receivable, end of year 35,000 Inventory, beginning of year 90,000 Inventory, end of year 110,000 a. 7.3 b. 2.5 c. 14.6 d. 25 2. The current ratio is a. Used to evaluate a company's liquidity and short-term debt paying ability. b. Is a solvency measure that indicated the margin of safety of a note holder or bondholder? c. Calculated by dividing current liabilities by current assets. d. Calculated by subtracting current liabilities from current assets. 3. The tendency of the rate earned on stockholders' equity to vary disproportionately from the rate earned on total assets is sometimes referred to as a. leverage b. solvency c. yield d. quick assets 4. Decisions to install new equipment, replace old equipment, and purchase or construct a new building are examples of a. Sales mix analysis. b. Variable cost analysis. c. Capital investment analysis. d. Variable cost analysis. 5. By converting dollars to be received in the future into current dollars, the present value methods take into consideration that money: a. has an international rate of exchange b. is the language of business c. is the measure of assets, liabilities, and stockholders' equity on financial statements d. has a time value 6. The amount of the average investment for a proposed investment of $60,000 in a fixed asset, with a useful life of four years, straight-line depreciation, no residual value, and an expected total net income of $21,600 for the 4 years, is: a. $10,800 b. $21,600 c. $ 5,400 d. $30,000 7. A series of equal cash flows at fixed intervals is termed a (n): a. present value index b. price-level index c. net cash flow d. annuity 25. The management of Arkansas Corporation is considering the purchase of a new machine costing $490,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability in this situation: Year Income from Operations Net CashFlow 1 $100,000 $180,000 2 40,000 120,000 3 40,000 100,000 4 10,000 90,000 5 10,000 120,000 The net present value for this investment is: a. positive $36,400 b. positive $55,200 c. Negative $16,170 d. Negative $126,800 8. An anticipated purchase of equipment for $500,000, with a useful life of 8 years and no residual value, is expected to yield the following annual net incomes and net cash flows: Year Net Income Net Cash Flow 1 $60,000 $120,000 2 50,000 110,000 3 50,000 110,000 4 40,000 100,000 5 40,000 60,000 6 40,000 60,000 7 40,000 60,000 8 40,000 60,000 What is the cash payback period? a. 5 years b. 4 years c. 6 years d. 3 years 9. Using the following partial table of present value of $1 at compound interest, determine the present value of $30,000 to be received three years hence, with earnings at the rate of 12% a year: Year 6% 10% 12% 1 .943 .909 .893 2 .890 .826 .797 3 .840 .751 .712 4 .792 .683 .636 a. $14,240 b. $16,800 c. $21,360 d. $15,840 10. Heather Company is considering the acquisition of a machine that costs $360,000. The machine is expected to have a useful life of 6 years, a negligible residual value, an annual cash flow of $120,000, and annual operating income of $83,721. What is the estimated cash payback period for the machine? a. 3 years b. 4.3 years c. 2.5 years d. 5 years 11. The expected average rate of return for a proposed investment of $4,800,000 in a fixed asset, using straight line depreciation, with a useful life of 20 years, no residual value, and an expected total net income of $8,640,000 is: a. 25% b. 18%. c. 40% d. 9.0% 12. The cash payback method is widely used in evaluating investments. The following are reasons why this method is used except: a. The longer the payback, the longer the estimated life of the asset. b. The shorter the payback, the sooner the cash spend on the investment is recovered. c. The shorter the payback, the least likely the possibility of obsolescence d. All of the above are correct. 13. Big Wheel, Inc. collects 25% of its sales on account in the month of the sale and 75% in the month following the sale. If sales are budgeted to be $200,000 for March and $250,000 for April, what are the budgeted cash receipts from sales on account for April? my Answer:$212,5000