What is the present value of $100 realized two years from now if the interest rate is 10%? a. $80 b. $83 c. $90 d. $100 e. $110

• If you buy $2000 of cheese and sell half of it, expenses are $1000 • If you sell it for a 50% markup, the revenue is 1.5 times the cost • Revenue = $1500, income = $1500 - $1000 = $500 Balance sheet leads to accounting equation • A=L+SE • All assets must be financed by stockholders equity and liabilities (debt) Liabilities (debt) are the senior claim and have the first opportunity to be paid • Debt may be secured • Collateral • Stockholders equity is the residual claim and gets what remains after the debt has been paid off