1. Which of the following actions should Reece Windows take if it wants to reduce its cash conversion cycle?
a. Take steps to reduce the DSO. b. Start paying its bills sooner, which would reduce the average accounts payable but not affect sales. c. Sell common stock to retire long-term bonds. d. Sell an issue of long-term bonds and use the proceeds to buy back some of its common stock. e. Increase average inventory without increasing sales.
2. A project requires an initial investment of $10,000 and it produces net cash flows of $10,000 one year from now and $2000 two years from now. The annual effective interest rate is 11%. Determine the project’s net present value and internal rate of return.
A. 17.08% B. 18.08 C. 19.08% D. 20.08% E. 21.08%