Questions -
1. West Hill Hardware is adding a new product line that will require an investment of $1,500,000. Managers estimate that this investment will have a 10-year life and generate net cash inflows of $310,000 the first year, $300,000 the second year, and $250,000 each year thereafter for eight years. The investment has no residual value. Compute the payback period.
2. Assume a company has a current ratio of 2.0. List two examples of transactions that could cause the current ratio to increase. Also list two examples of transactions that could cause the current ratio to decrease.
3. Dividends paid to a company's stockholders would appear on the statement of cash flows as a
a. increase in the investing section
b. decrease in the investing section
c. increase in the financing section
d. decrease in the financing section