The Ajax Company Just Decided to Save $2,500 a Month

question 99

Multiple Choice

The Ajax Company just decided to save $2,500 a month for the next five years as a safety net for recessionary periods.The money will be set aside in a separate savings account which pays 3.25% interest compounded monthly.It deposits the first $2,500 today.If the company had wanted to deposit an equivalent lump sum today,how much would it have had to deposit?

• A)$134,964.59
• B)$135,189.29
• C)$137,428.87
• D)$138,648.81
• E)$139,998.01

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Definitions:

Credit Sales

Sales made by a business on credit, where payment is collected at a later date.

Bad Debt Expense

The estimated amount of receivables that a company does not expect to collect.

Uncollectible Account Receivable

A receivable that is considered unlikely to be collected, representing a loss to the company.

Operating Income

Income generated from normal business operations, calculated as gross income minus operating expenses.