I think the answer is a. I'm not 100 sure though.
Answer:
Partners Dennis and Lilly have decided to liquidate their business. The following information is available:
Cash $100,000 Accounts Payable $100,000
Inventory $200,000 Dennis, Capital $120,000
Lilly, Capital $80,000
$300,000 $300,000
Dennis and Lilly share profits and losses in a 3:2 ratio. During the first month of liquidation, half the inventory is sold for $60,000, and $60,000 of the accounts payable is paid. During the second month, the rest of the inventory is sold for $45,000, and the remaining accounts payable are paid. Cash is distributed at the end of each month, and the liquidation is completed at the end of the second month.
1. Using a safe payments schedule, how much cash will be distributed to Dennis at the end of the first month?
a. $36,000
b. $64,000
c. $60,000
d. $24,000
2. Using a safe payments schedule, how much cash will be distributed to Lilly at the end of the first month?
a. $40,000
b. $24,000
c. $64,000
d. $16,000
The present value of the cash-flow stream if the interest rate is 6% is $323.03.
<h3>What is the interest rate?</h3>
The interest rate can be defined as the amount or the percentage that is being fixed or fluctuating depending upon the condition of the agreement. The interest is calculated on the amount that is being loaned or given to the individual or a company.
According to the given question, the interest rate is 6%
1st year $120
2nd year $320
3rd year $220
Now, by applying the formula for the present value:
= 113.20 + 284.96 + 184.87
= 323.03
The present value of the cash flow stream is $323.03
Learn more about interest rate, here:
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