Author Question: Which of the following statements is MOST correct concerning the relationship between a company's ... (Read 46 times)

ts19998 · **on:** Jul 10, 2018

Which of the following statements is MOST correct concerning the relationship between a
company's cash budget and its income statement?

A) If net income is positive, then cash flow must be positive.
B) If net income is positive, then cash flow could be positive or negative, but if net income is
negative, cash flow must also be negative.
C) If net income is positive for 3 or more months in a row, then cash flow must be positive.
D) Cash flow could be positive whether net income is positive or negative.

Question 2

Your family recently won the 10,000,000 lottery and chose to accept the annual payout plan of 500,000 today plus 19 more year-end cash flows of 500,000. If you discount these cash flows at an annual rate of 8.0, what is their present value?

What will be an ideal response?

yahahah24021 · **Reply #1 on:** Jul 10, 2018

Answer to Question 1

D

Answer to Question 2

Answer:
PV = PMT (1 + r)1 = 500,000 (1.08)1 = 5,301,799.60.
Explanation: This is a 20-payment annuity due.