1) Blue Co. is evaluating the following five year annuity proposals:

Annuity #1: $50,000 paid annually with payments to be made at the end of each year (i.e. an "ordinary annuity").

Annuity #2: $50,000 paid annually with payments to be made at the beginning of each year (i.e. an "annuity due").

Assume the interest rate is 6%. Which annuity will provide the largest present value?

a. Annuity #1

b. Annuity #2

c. Both are the same

d. Cannot be determined

2) Biz Co. has cash in bank of $40,000, restricted cash in a separate account of $6,000, a bank overdraft in an account at another

bank of $2,000 and a $5,000 certificate of deposit that matures in 9 months. Biz Co. should report cash of

a. $45,000

b. $40,000

c. $24,000

d. $46,000

3) Cloud Co. receives a three year, $120,000 zero-interest bearing note. The market interest rate is 10% per annum. What cash

payment would be recorded in the journal entry?

a. $120,000

b. $90,158

c. $109,090

d. $99,174

4) Sun Co. receives a two year, $100,000 zero-interest bearing note. The market interest rate is 10% per annum. What amount of

interest revenue would be recognized in the first year?

a. $120,000

b. $90,158

c. $109,090

d. $99,174

5) Blue Co. has the following financial information at 12/31/20:

Accounts Receivable: $10,000

Accounts Payable: $10,000

Unearned Revenue: $10,000

Equity Investments to be sold on 1/31/21: $10,000

What will Blue report as current assets?

a. $10,000

b. $20,000

c. $30,000

d. $40,000

6) Matrix Co. reported the following items in the most recent year.

Net income $50,000

Dividends paid 6,000

Increase in accounts receivable 10,000

Increase in accounts payable 7,000

Purchase of equipment (capital expenditure) 9,000

Depreciation expense 4,000

Issue of notes payable 20,000

What is Free Cash Flow?

a. $36,000

b. $42,000

c. $54,000

d. $70,000

7) On the statement of cash flows, Blue Co. reported:

Net Cash from Operating Activities: $100,000

Net Cash from Investing Activities: ($20,000)

Change in Cash: $160,000

What was Net Cash from Financing Activities?

a. $80,000

b. $140,000

c. $240,000

d. $260,000