Table 152 the Company Earns 5 Percent on Current Assets

Multiple Choice

Table 15.2 The company earns 5 percent on current assets and 15 percent on fixed assets. The firm's current liabilities cost 7 percent to maintain and the average annual cost of long-term funds is 20 percent.
-If the firm was to shift $7,000 of fixed assets to current assets, the firm's net working capital would ________, and the risk of not being able to meet current obligations would ________, respectively. (See Table 15.2)

A) increase; increase
B) decrease; decrease
C) increase; decrease
D) decrease; increase