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Financial Accounting Problem!?
I was wondering if someone can share their thoughts about this problem.
You recently invested $12,000 of your savings in a security issued by a large company. The security agreement pays you 7 percent per year and has a maturity two years from the day you purchased it. What is the total cash flow you expect to receive from this investment, separated into the return on your investment and the return of your investment?
In my answer I came up with 1680 but it wasn't the right amount so I tried something different like:
After the first year we will be making 840 ( that's 7 percent of 12K ) and then the second year we will be making 898.80 ( that's 7 percent of 12,840).
So the total would be 1738.80 Cash flow. Is that right?!
2 Answers
- ?Lv 79 years agoFavorite Answer
You may have just been confused on what they were asking for.
What is the total cash flow you expect to receive from this investment,
12,000 + 840 + 840 = $13,680
separated into the return on your investment
840 + 840 = $1,680
and the return of your investment?
$12,000
Source(s): Accounting Fan - Anonymous5 years ago
Dude those are just simple formula plug ins.... Look for the receivable turnover ratio..... then convert it to days.... remember 365 days in a year....
