Question

Jonathon has won a lottery today. He is entitled to receive $10,000 a year for the next 10 years. How do we call the current value of these payments that will be made to Jonathon?

• future value

• simple amount

• single amount

• compounded value

• present value

As Dell is currently producing its products at its full capacity, it cannot produce and sell more without adding _______________.

• inventory

• net working capital

• debt-equity ratio

• long-term debt

• fixed assets

Cindy wants to have $1 million for her retirement. To achieve this goal, she is going to make one lump sum deposit today. If she plans to retire _________ rather than _______, then she will need to deposit a bigger lump sum today.

• sooner; later

• today; later

• later; sooner

Answer 1

ANSWER 1)

Option (e) : PRESENT VALUE

EXPLANATION : Present Value is the discounted Value of the Future Cashflows So it represents the Value of future Inflows as on today.

ANSWER 2)

Option (e) : FIXED ASSETS

EXPLANATION : As it is mentioned in question that currently the production is going at its full capacity. So we cannot produce more from the given amount of Fixed Assets (ie Machine). So in order to produce more we have to add more Machines.

ANSWER 3)

Option (a) : SOONER ; LATER

EXPLANATION : The reason is that if she wants to retire sooner than she wont earn much on the amount that she will be depositing due to the Shorter Period. So in case she plans to retire Sooner that she needs to deposit much bigger amount in order to get 1million at her retirement