Assume the Average Annual CPI Values for 2010 and 2011

question 83

Multiple Choice

Assume the average annual CPI values for 2010 and 2011 were 207.3 and 215.3,respectively.What was the percent increase in the CPI between these two years?

• A) 0.96
• B) 1.04
• C) 3.86
• D) 8.0

Understand the relationship between the nature of products (perishability, demand, cost) and credit period lengths.

Grasp the significance of changes in credit terms on a firm's Accounts Receivable Collection Period (ACP).

Recognize the impact of competition and product cost on the length of credit periods offered.

Understand the importance of cash discounts in the decision to offer credit.

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Definitions:

Capital Structure

The mix of various forms of capital used by a company, including debt and equity, to finance its operations.

Equity

Represents the value that would be returned to a company's shareholders if all of the assets were liquidated and all of the company's debts were paid off.

Refunding Investment Outlay

The process of reallocating or investing capital in new assets or projects with the intention of generating returns or benefits that exceed the initial costs.

Marginal Tax Rate

The marginal tax rate is the rate of tax that applies to the next dollar of taxable income above a pre-determined level.