Cheryl Writes Checks Totaling $200,but She Has Only $100 in Her

question 59

Multiple Choice

Cheryl writes checks totaling $200,but she has only $100 in her account.Check #101 is for $50;#102 is for $75;#103 is for $25;and #104 is for $50.All of the checks reach the bank on the same day.In what order should the bank charge them?

• A) Under Article 4,it must charge them in the order in which they were drawn.
• B) It must call the customer to ask which items should be paid.
• C) The bank may pay them in any order it deems convenient.
• D) The bank must dishonor all of the checks.

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Definitions:

Discounted Payback Period

The time required to recoup the cost of an investment while accounting for the time value of money, typically used in capital budgeting to assess profitability.

After-Tax Cash Inflows

The net cash that a business generates after accounting for all taxes.

Required Return

The minimum return an investor expects to achieve on an investment, considering its risk level.

Internal Rate of Return

A financial metric used to gauge the profitability of potential investments.