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