Martha B's Has Total Assets of $1,750

question 60

Multiple Choice

Martha B's has total assets of $1,750. These assets are expected to increase in value to either $1,800 or $2,400 by next year. The company has a pure discount bond outstanding with a face value of $2,000.This bond matures in one year. Currently,U.S. Treasury bills are yielding 6%. What is the value of the equity in this firm?

• A) $16.98
• B) $34.59
• C) $36.67
• D) $37.08
• E) $51.89

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Definitions:

Sole Proprietorship

A type of business where a single individual owns, manages, and is responsible for all aspects of the business, including liabilities.

Non-Profit Organization

An organization dedicated to furthering a particular social cause or advocating for a shared point of interest, without aiming for profit.

Managing Partner

The partner in a law firm who makes decisions relating to the firm’s policies and procedures and who generally oversees the business operations of the firm.

Business Operations

Activities involved in the day-to-day functions of a business related to producing and delivering its products or services.