6.1 percent 10.2 percent 6.0 percent 5.9 percent We call the process of earning interest on both the original deposit and on the earlier interest payments : computing . multiplying . compounding . discounting . Which financial statement reports a firm ’ s assets , liabilities , and equity at a particular point in time ? Balance sheet Income statement Statement of retained earnings Statement of cash flows You are trying to pick the least-expensive machine for your company . You have two choices : machine A , which will cost $ 50,000 to purchase and which will have OCF of - $ 3,500 annually throughout the machine ’ s expected life of three years ; and machine B , which will cost $ 75,000 to purchase and which will have OCF of - $ 4,900 annually throughout that machine ’ s fouryear life . Both machines will be worthless at the end of their life . If you intend to replace whichever type of machine you choose with the same thing when its life runs out , again and again out into the foreseeable future , and if your business has a cost of capital of 14 percent , which one should you choose ? Machine A Machine B Neither machine A nor B Both machines A and B When firms use multiple sources of capital , they need to calculate the appropriate discount rate for valuing their firm ’ s cash flows as __________. a simple average of the capital components costs a weighted average of the capital components costs a sum of the capital components costs