Author Question: A 10-year ordinary annuity that provides a return of 7 has a present value of 15,000. What are the ... (Read 145 times)

abern · **on:** Jul 10, 2018

A 10-year ordinary annuity that provides a return of 7 has a present value of 15,000. What are the annual annuity payments?

A) 2,135.66
B) 2,038.02
C) 2,235.44
D) 1,500.00
E) 2,232.84

Question 2

Plato Industries' projected sales for the first six months of 2012 are given below:

Jan. 250,000 April 300,000
Feb. 340,000 May 350,000
Mar. 280,000 June 380,000
20 of sales are collected in cash at time of sale, 50 are collected in the month following the sale,
and the remaining 30 are collected in the second month following the sale. Cost of goods sold is
85 of sales. Purchases are made in the month prior to the sales, and payments for purchases are
made in the month of the sale. Total other cash expenses are 70,000/month. The company's cash
balance as of February 28, 2012 will be 10,000. Excess cash will be used to retire short-term
borrowing (if any). Plato has no short term borrowing as of February 28, 2012. Ignore any interest
on short-term borrowing. The company must have a minimum cash balance of 40,000 at the
beginning of each month. Plato's projected cumulative short-term borrowing as of April 30, 2012?
A) 33,000 B) 60,000 C) 25,000 D) 50,000