Multiple Choises

11. What cash discount is provided by "terms 2/10 net 45 End of Month (EOM)"?

a. 2% discount if paid in 10 days; if no cash discount is taken, balance is due 45 days after the end of the month

b. 2% discount if paid in 10 days; if no cash discount is taken, balance is due 45 days after completion of the transaction

c. 10% discount if paid in 2 days; if no cash discount is taken, balance is due 45 days after completion of the transaction

d. 10% discount if paid in 2 days; if no cash discount is taken, balance is due 45 days after the end of the month

12. A share of common stock that paid a $3 dividend last year is expected to have a 6% annual growth rate. The required rate of return is 14%. Next year.s dividend is expected to be

a. $3.00

b. $3.06

c. $3.18

d. $3.42

13. A project that costs $1000 to undertake and generates $200 per year in revenues for 8 years, has a present value of $1067. Which of the following is true?

a. The net present value of the project is $2067.

b. The net present value of the project is $1067.

c. The net present value of the project is $67.

d. The project should not be undertaken.

14. A reasonable short-term financial decision for a multinational company that expects a local foreign currency to appreciate is to

a. increase local accounts receivable and decrease local accounts payable

b. increase both local inventories and local notes payable

c. increase both local customers accounts receivable and local notes payable

d. decrease both local notes receivable and accruals

15. If the cash discount period is increased, the firm.s investment in accounts receivable due to discount takers still getting cash discounts but paying later is expected to

a. increase

b. remain unchanged

c. decrease

d. change, but the direction of change cannot be determined