[The Following Information Applies to the Questions Displayed Below

question 59

Multiple Choice

[The following information applies to the questions displayed below.]

During Year 1, El Paso Company had the following changes in account balances:

The Accumulated Depreciation account had a beginning balance of $25,000 and an ending balance of $35,000. The increase was due to depreciation expense.
The Long-Term Notes Payable account had a beginning balance of $40,000 and an ending balance of $15,000. The decrease was due to repayment of debt.
The Equipment Account had a beginning balance of $25,000 and an ending balance of $92,500. The increase was due to the purchase of other operational assets.
The Long-Term Investments Account (Marketable Securities) had a beginning balance of $18,000 and an ending balance of $12,500. The decrease was due to the sale of investments at cost.
The Dividends Payable account had a beginning balance of $12,000 and an ending balance of $10,000. There were $20,000 of dividends declared during the period.
The Interest Payable account had a beginning balance of $2,250 and an ending balance of $1,250. The difference was due to the payment of interest.

-What is the net cash flow from investing activities?

• A)$62,000 outflow
• B)$62,000 inflow
• C)$67,500 outflow
• D)$73,000 outflow

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Definitions:

Marginal Propensity

The ratio of change in an economic variable, such as consumption or saving, to a change in another variable, like income.

Disposable Income

The net income available to individuals or households after taxes have been deducted, available for spending, saving, or investing.

Consumption

The act of using goods and services by households, contributing to the overall demand in an economy.

Consumption Function

An economic formula that represents the relationship between total consumption and gross national income.