What is the advantage to a small business when planning for shortfalls in cash flow?
A) Financial resources can be saved in a savings account until needed.
B) Banks are more likely to offer loans if they know when the money will be needed.
C) Loans can be obtained in advanced and put in interest earning investments.
D) Lower interest loans can be sought for the needed time frame.
E) Small businesses will appear more professional, resulting in favorable banking relationships.
Answer: C
Explanation: C) Such information can be invaluable for the small-business manager. By anticipating shortfalls, managers can seek funds in advance and minimize their costs. By anticipating excess cash, a manager can plan to put the funds to work in short-term, interest-earning investments.
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For a team to do well, the individuals composing the team must sometimes not maximize their individual effort. This is referred to as:
A. subsystem nonoptimization. B. limited span of control. C. organizational process loss. D. intersender role conflict.
An investment of $150,000 is expected to generate an after-tax cash flow of $100,000 in one year and another $120,000 in two years. The cost of capital is 10 percent. What is the internal rate of return?
a. 28.39 percent. b. 28.59 percent. c. 28.79 percent.