AAA Associates is a construction company. It has acquired an impressive market share since it is into the business. However, there are certain financial decisions that AAA needs to take and has hired you as a financial consultant. Below is the relevant information of AAA that you will require to do the analysis.

(in millions) Quick Ratio 4X Current ratio 6X Fixed assets 408.5 Sales 1125 Cash and marketable securities 225 Net Income 175 Common shares outstanding 20 Dividends paid 11.2 DSO (based on 360 days) 53 days ROE 15% depreciation 3.5 Days used 360

QUESTION NO. 2 (10 MARKS)

AAA Associates is also considering an investment in 2025 for which it will need an investment of 12000 $. Considering it is Jan, 01 2021, a) how much should AAA deposit on Jan, 01 2022 to have an amount equivalent to 12000 $ at end of 2025. Their bank is offering to compound interest rate at 12% annual rate. b) Incase AAA decides to make equal payments from Jan 01 2022 to Jan 01 2025, how large the payments should be to accumulate 12000 $ by 2025? c) AAA is also considering the option to either opt for the equal payments as calculated in part b or use a lumpsum amount of $ 1550 on Jan 01, 2022, which option you think is more feasible? d) In case you opt for the lumpsum payment, on Jan 01, 2022, what interest rate, compounded annually, would AAA earn to have the required amount of 12000 $ on Jan 01, 2025.