1. Which one of the following will increase net working capital? assume the current ratio is positive.
a. using cash to pay an accounts payable.
b. using cash to pay a long-term debt.
c. selling inventory cost
d. collecting an accounts receivable.
e. using a long-term loan to buy inventory
2. Five years ago Constellation, Inc., sold an issue of 20-year $1000 par bonds to finance a new distribution terminal. The bonds pay 7.0% interest, semi-annually. Today’s required rate of return for similarly rated bonds is 6.7%. How much should these bonds sell for today? (Round off to the nearest $1.)
a) $650
b) $862
c) $1,028
d) $1,208
e) $1,375