Please refer to Table 4-1 for the following questions.

Table 4-1

 Stewart Company 

 Balance Sheet 

Assets:

Cash and marketable securities $600,000 

Accounts receivable 900,000 

Inventories   1,500,000 

Prepaid expenses 75,000 

Total current assets $3,075,000 

Fixed assets  8,000,000 

Less: accum. depr. -2,075,000

Net fixed assets $5,925,000 

Total assets $9,000,000 

Liabilities:

Accounts payable $800,000 

Notes payable   700,000 

Accrued taxes 50,000 

Total current liabilities $1,550,000 

Long-term debt 2,500,000 

Owner's equity (1 million shares of common stock outstanding) 4,950,000 

Total liabilities and owner's equity $9,000,000 

Net sales (all credit) $10,000,000 

Less: Cost of goods sold -3,000,000

Selling and administrative expense -2,000,000

Depreciation expense -250,000

Interest expense -200,000

Earnings before taxes 4,550,000 

Income taxes -1,820,000

Net income $2,730,000 

Based on the information in Table 4-1, the average collection period is

29.85 days.

32.85 days.

36.50 days.

46.34 days.

Please refer to Table 4-1 for the following questions.

Table 4-1

 Stewart Company

 Balance Sheet

Assets:

Cash and marketable securities $600,000 

Accounts receivable 900,000 

Inventories   1,500,000 

Prepaid expenses 75,000 

Total current assets $3,075,000 

Fixed assets  8,000,000 

Less: accum. depr. -2,075,000

Net fixed assets $5,925,000 

Total assets $9,000,000 

Liabilities:

Accounts payable $800,000 

Notes payable   700,000 

Accrued taxes 50,000 

Total current liabilities $1,550,000 

Long-term debt 2,500,000 

Owner's equity (1 million shares of common stock outstanding) 4,950,000 

Total liabilities and owner's equity $9,000,000 

Net sales (all credit) $10,000,000 

Less: Cost of goods sold -3,000,000

Selling and administrative expense -2,000,000

Depreciation expense -250,000

Interest expense -200,000

Earnings before taxes 4,550,000 

Income taxes -1,820,000

Net income $2,730,000 

Based on the information in Table 4-1, the acid-test ratio is

0.97.

1.02.

1.71.

1.67.
The present value of $1,000 to be received in 5 years is ________ if the discount rate is 12.78%.

$687

$494

$368

$548

Biff deposited $9,000 in a bank account, and 10 years later he closes out the account, which is worth
$18,000. What annual rate of interest has he earned over the 10 years?

6.45%

10.00%

9.10%

7.18%