The Widget Co

question 27

Multiple Choice

The Widget Co. purchased all of its fixed assets three years ago for $4 million. These assets can be sold today for $2 million. The current balance sheet shows net fixed assets of $2,500,000, current liabilities of $1,375,000, and net working capital of $725,000. If all the current assets were liquidated today, the company would receive $1.9 million in cash. The book value of the total assets today is ________ and the market value of those assets is ________.

• A) $4,600,000; $3,900,000
• B) $4,600,000; $3,125,000
• C) $5,000,000; $3,125,000
• D) $5,000,000; $3,900,000
• E) $6,500,000; $3,900,000

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Definitions:

Malthus

Thomas Robert Malthus, an 18th-century British economist and demographer best known for his theory that population growth will always tend to outstrip the food supply.

Famine

A severe shortage of food resulting in widespread hunger and starvation, often caused by natural disasters, war, or agricultural failure.

Cyclical Theories

Theories that suggest phenomena or events occur in repetitive cycles or patterns, often applied in economics, history, and sociology.

Birthrate

The number of babies born each year for every 1000 members of the population.