Question

When using the percent-of-sales method in forecasting funds needed, which of the following is not true?
A. As the dividend payout ratio decreases, the required new funds also decrease.
B. Required new funds decrease as profits margins increase.
C. Required new funds increase as accumulated amortization increases.
D. As the tax rate increases, the required new funds increase.

An amount of money to be received in the future is worth less today than the stated amount.
A. True

B. False

In evaluating capital investment projects, current outlays must be judged against the current value of future benefits.
A. True

B. False

The time value of money concept becomes less critical as the prime rate increases.

A. True
B. False

As the time period until receipt decreases, the present value of an amount at a fixed interest rate
A. decreases.
B. remains the same.
C. increases.
D. not enough information to tell

James is creating a university investment fund for his son Jon. He will put in $71.00 per month at the end of each month for the next 15 years and expects to earn an 8% annual rate of return, compounded monthly. How much money will Jon have when he starts university?
A. $28,052.38
B. $12,780.00
C. $13,393.98
D. $24,568.71

Answer 1