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What is the maximum additional short-term funding

Problem 1. B.J. Industries has a current ratio of 2.5, with $2.5 million in current assets. Due to sales growth, the company wants to expand accounts receivable and inventories by taking on additional short-term debt. If B.J. Industries wants to maintain a minimum current ratio of 2.0, what is the maximum additional short-term funding it can borrow?

a.$750,000

c. $150,000

b. $350,000

d. $500,000

Problem 2. You are comparing two investment options. The cost to invest in either option is the same today. Both options provide you with $20,000 of income. Option A pays five annual payments of $4,000 each. Option B pays five annual payments starting with $8,000 the first year followed by four annual payments of $3,000 each. Which one of the following statements is correct given these two investment options?

a. Both options are of equal value given that they both provide $20,000 of income.

b. Option A has a higher present value than option B given any positive rate of return.

c. Option B has a higher present value than option A given any positive rate of return.

d. Option B has a lower future value at year 5 than option A given a zero rate of return.

Problem 3. Mr. Moore will be 35 years at the end of the month and he wishes to retire in 25 years. He plans to invest in a mutual fund earning 7.5 percent annual return compounded monthly and have a $1.5 million retirement fund at age 60. How much must be deposited at the end of each month to achieve his goal?

a. $2,850 c. $1,449

b. $8,514 d. $1,710

Problem 4. You are the manager of an annuity settlement company. Jim Patton just won the state lottery which promises to pay him $1,000 per year for 20 years, starting from today, and $2,000 per year for years 21-45, given a 9% discount rate. Your company wants to purchase the proceeds from the lottery from Jim. What is the most that your company can offer?

a. $13,770.90

b. $18,680.95

c. $23,721.01

d. $12,633.85

Problem 5. Jean Cleveland currently has $5,750 in a money market account paying 5.65 percent compounded semi-annually. She plans to use this amount and her savings over the next 5 years to make a down payment on a townhouse. She estimates that he will need $15,000 in 5 years. How much should she invest in the money market account semi-annually over the next 5 years to achieve this target?

a. $ 886.28

b. $ 757.25

c. $ 650.97

d. $ 610.79

Problem 6. You are the beneficiary of a life insurance policy. The insurance company informs you that you have two options for receiving the insurance proceeds. You can receive a lump sum amount of $50,000 today, or receive payments of $641 a month for 10 years. You can earn 6.5% on your money. Which option should you take and why?

a. You should accept the payments, because they are worth $56,452 today.

b. You should accept the payments, because they are worth $56,737 today.

c. You should accept the $50,000 because the payments are worth only $47,758 today.

d. You should accept the $50,000 because the payments are worth only $47,808 today.

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## Q : Variable and fixed costs of hamburger production

What are the variable and fixed costs of hamburger production? (Enter your answers in dollars not in millions.)