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Use the Following Information for Questions

question 57

Multiple Choice

Use the following information for questions.
On January 1, 2011, in an effort to lure Tar-Mart, a major discount retail chain to the area, the city of Bordeaux agreed to provide the company with a €6,000,000 three-year, Zero-interest bearing note.The prevailing rate of interest for a loan of this type is 10% and the present value of €6,000,000 at 10% for three years is €4,507,800.
-At December 13, 2011, Tar-Mart will report Deferred Grant Revenue of

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Definitions:

External Financing Needs (EFN)

The amount of funding a business requires from external sources to finance its planned growth or expansion activities.

Negative EFN

External Financing Needed; a scenario where a negative value indicates a surplus of funds, implying no external financing is required for growth or operations.

Retention Ratio

The proportion of net income that is retained in the business rather than paid out as dividends, indicating reinvestment rate.

Plowback Ratio

A measure of how much earnings are retained by a company after dividends are paid, as opposed to being paid out to shareholders.