During 2010, Gillespie Corporation Made a Loan of $155,000 to a Major

question 45

Multiple Choice

During 2010, Gillespie Corporation made a loan of $155,000 to a major customer. By the end of 2010 the customer had paid back $60,000 of the loan plus interest of $12,000. In the statement of cash flows for 2010, Gillespie Corporation would report:

• A) A net decrease in cash and cash equivalents of $72,000 for 2010.
• B) $72,000 net cash used for investing activities.
• C) $95,000 net cash used for investing activities, and $12,000 cash provided from operating activities.
• D) $155,000 net cash used for investing activities, and $72,000 net cash provided by financing activities.

---

Definitions:

Annuity

A financial product that pays out a fixed stream of payments to an individual, typically used as part of retirement planning.

Sensitivity Analysis

A technique used in financial modeling to determine how different values of an independent variable affect a particular dependent variable under a given set of assumptions.

Residual Value

The estimated value of a fixed asset at the end of its useful life, important for calculating depreciation.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time.