Picard Orchards Requires a $100,000 Annual Loan in Order to Pay

question 73

Multiple Choice

Picard Orchards requires a $100,000 annual loan in order to pay laborers to tend and harvest its fruit crop.Picard borrows on a discount interest basis at a simple annual rate of 11 percent.If Picard must actually receive $100,000 net proceeds to finance its crop,then what must be the face value of the note?

• A) $111,000
• B) $100,000
• C) $112,360
• D) $89,000
• E) $108,840

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Definitions:

Operating Cash Flow

The cash generated from the normal operating processes of a business, reflecting the company's ability to generate sufficient cash to meet its operating expenses.

Book Value

The difference between a company's total assets and its total liabilities, as shown in the balance sheet.

Statement of Financial Position

A financial statement detailing a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of its financial health.

Shareholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing ownership interest.