1. Edwards Electronics recently reported $13,000 of sales, $5,500 of operating costs other than depreciation, and $1,250 of depreciation. The company had no amortization charges, it had $3,500 of bonds that carry a 6.25% interest rate, and its federal-plus-state income tax rate was 35%. How much was its net cash flow?
a. $5,065.11 b. $5,170.31 c. $5,144.01 d. $5,117.71 e. $5,091.41
2. Which of the following should lead to higher interest rates and why?
A. Increased preference for delayed consumption (current saving)
B. Contractionary monetary policy
C. Less productive opportunities in the economy
D. Lower interest rates in other countries
E. Lower inflation expectations