1. Why might one firm have positive cash flows and be headed for financial trouble, whereas another firm with negative cash flows could actually be in a good financial position?
2. An investment is expected to result in equal payments of $25 at the end of each of the next 3 years (ordinary annuity). If the appropriate rate of return (discount rate) is 5%, what is the present value of the annuity stream? (annual compounding)
3. A company’s individual performance is only one part of the equation… explain the larger environment a company operates in and how it can manage any associated risks.