A Small Foundry Agrees to Pay $250,000 Two Years from Now

question 98

Multiple Choice

A small foundry agrees to pay $250,000 two years from now to a supplier for a given amount of coking coal.The foundry plans to deposit a fixed amount in a bank account every three months,starting three months from now,so that at the end of two years the account holds $250,000.If the account pays 5.5% APR compounded monthly,how much must be deposited every three months?

• A)$29,770
• B)$29,777
• C)$29,740
• D)$31,250

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Definitions:

Financing Section

This term refers to the part of a financial report or business plan that outlines how a company funds its operations, including debt, equity, and other financing sources.

Treasury Stock

Shares that were once a part of the outstanding shares and have been bought back by the company.

Statement of Cash Flows

A report detailing how variations in balance sheet accounts and income levels influence cash and cash equivalents.

Operating Activities

Activities that are directly related to the running of a business and its day-to-day functions, generating most of its revenue and expenses.