Question

For a given constant payment, number of periods, and positive interest rate, which of the following is worth more? The future value of an ordinary annuity. Both are worth the same amount. Cannot be determined from the information given The future value of an annuity due. Save Question 6 (1 point) An increase in which one of the following accounts increases a firm's current ratio without affecting its quick ratio? None of these are correct. Accounts payable. Inventory. Cash Accounts receivable.

Answer 1

1.Future value of annuity=Annuity[(1+rate)^time period-1]/rate

while Future value of annuity due=Future value of annuity*(1+interest rate)

Hence for a given payment ,period and interest rate;Future value of annuity due would be more than Future value of annuity.

Hence the correct option is :Future value of annuity due.

2.

Current ratio=Current assets/Current liabilities

while

Quick ratio=(Current assets-Inventory)//Current liabilities[Here current assets would constitute of cash,accounts receivable etc).

Hence increase in inventory would increase current ratio while not affect quick ratio.