1. Classify the following changes in each of the accounts as either an outflow or an inflow of cash. (1 Mark 0.2 each)

a) Is a decrease in land and buildings an inflow or an outflow of cash?

b) Is an increase in accounts payable an inflow or an outflow of cash?

c) Is a decrease in vehicles an inflow or an outflow of cash?

d) Is an increase in accounts receivable an inflow or an outflow of cash?

e) Is the payment of dividends an inflow or an outflow of cash?

2- You have $5,100 to invest today at 11% interest compounded annually. Find how much you will have accumulated in the account at the end of: (0.5 Marks each)

(1) 4 years,

(2) 8 years, and

(3) 12 years.

4. Using the values below, answer the questions that follow:

Amount of annuity

Interest rate

Deposit period (years)

$500

9%

10

a) Calculate the future value of the annuity, assuming that it is

(1) An ordinary annuity. (0.5 marks)

(2) An annuity due. (0.5 marks)

b) Compare your findings in parts a(1) and a(2). All else being identical, which type of annuityordinary or annuity dueis preferable as an investment? Explain why. (0.5 Marks)