Draw the decision tree for the problem

The ACME company is in the oil business. It has a transferable short-term option to drill on a certain plot of land. The company has three options.

(a) Drill immediately.

(b) Pay to have a seismic test run in the next few days, and then, depending on the result of the test, decide whether or not to drill.

(c) Let the option expire.

How would you draw the decision tree for the problem?

A company with a current ratio of 2.5 has current liabilities of $130,000. Indicate whether the transactions increase or decrease the current ratio, the working capital and if yes, to what extent.

• The company purchased Rs 10,000 worth of goods on account.

• The company collects accounts receivables amounting to Rs 8,000.

• The company purchases a machine worth Rs 40,000 by paying Rs 10,000 in cash and the balance on credit to be paid

• after 15 months.

• Company pays dividends amounting to Rs 10,000 in cash.

Solution: