Use the Equation Presented Below to Answer the Question That

question 77

Multiple Choice

Use the equation presented below to answer the question that follows: Cash = CL + LTL + CS + RE - NCCA - LTA

where: $\begin{array}{l}\text { CL = Current li abilities } \\\text { LTL = Long-term liabilities } \\\text { CS = Common stock } \\\text { RE = Retained earnings } \\\text { NCCA = Noncash current assets } \\\text { LTA = Long-term assets }\end{array}$
- Which of the following activities results in a cash outflow?

• A)Decreases in noncash current assets (NCCA)
• B)Decreases in long-term assets (LTA)
• C)Increases in long-term liabilities (LTL)
• D)Decreases in retained earnings (RE)

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Definitions:

Equity Investments

Financial investments in shares of companies, giving the holder ownership interest in the company.

Required Rate

The minimum annual percentage return that an investor expects to earn when investing in a particular security or project, factoring in risk.

Risk-Free Rate

The theoretical rate of return of an investment with no risk of financial loss.

Risk Premium

The additional return above the risk-free rate demanded by investors for taking on a certain level of risk.