Question
Company A has a times-interest-earned ratio of 5.9, and company B has a times-interest-earned ratio of 6.4. A is a competitor of B. What conclusions
Company A has a times-interest-earned ratio of 5.9, and company B has a times-interest-earned ratio of 6.4. A is a competitor of B. What conclusions would the chief financial officer of A arrive at looking at these numbers and his competitor's?
Question 14 options:
| The times-interest-earned ratio is of no interest to lenders because the ratios are so close together. |
| Company A is in a better position to pay interest than it was last year. |
| A times-interest-earned ratio of 5.9 is better than a times-interest-earned ratio of 6.4. |
| Company B is in a better position to pay interest than company A. |
Question 15 (1 point)
PKU Company needs to replace a machine in 4 years. The new machine is expected to cost $35,000. How much does PKU have to put into a savings account today to have enough saved to purchase the machine, assuming an annual interest rate of 2%, compounded annually? (round to the nearest dollar)
Question 15 options:
| $32,360 |
| $35,000 |
| $32,335 |
| $34,313 |
Question 16 (1 point)
CFR Company sold equipment to ABC Company in exchange for a note receivable. The note charges 12% annually, and ABC is required to make monthly payments of $500 for the next 24 months. What is the present value of the note receivable? (round to the nearest dollar)
Question 16 options:
| $10,622 |
| $20,073 |
| $3,892 |
| $24,798 |
Question 17 (1 point)
You have won the local lottery and will receive $1,000 cash each year for three years. If the discount rate is 5%, what is the present value of this award (rounded to the nearest dollar)?
Question 17 options:
| $ 4,580 |
| $ 3,150 |
| $ 2,591 |
| $ 2,723 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started