15 and 16

QUESTION 15 Magic Printers has developed a forecasting model to estimate its AFN for the upcoming year. All else being equal, Which of the following factors is most likely to lead to an increase of the additional funds needed (AFN)? O a. A sharp reduction in its forecasted sales. O b. The company switches its materials purchases to a supplier that sells on terms of 175. net 90, from a supplier whose terms are 3/15, net 35. Oc. The company reduces its dividend payout ratio. Od. A sharp increase in its forecasted sales. Oe. The company discovers that it has excess capacity in its fixed assets. QUESTION 16 Mary has just won a $40 million lottery, which will pay her $2 million at the end of each year for 20 years. An investor has offered her $18 million today for this annuity. She estimates that she can earn 10 percent interest, compounded annually, on any amounts she invests. She asks for your advice on whether to accept or reject the offer. What will you tell her? I O a. Accept an offer of $18,000,000 today. O b. Accept $2,000,000 at the end of each year for 20 years Oc. Accopt an offer of $15,000,000 today, O d. Accept an offer of $16,000,000 today, O e Accept an offer of $16,500,000 today