A company borrowed $10,000 by signing a 180-day promissory note at 9%. The total interest due on the maturity date is: (Use 360 days a year.)
A. $300
B. $900
C. $450
D. $75
E. $1,800
Answer: C
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In calculating earnings per share, a company uses the treasury stock method when
A) it needs to value the cash received for a convertible bond. B) it recognizes the assumed impact of exercising outstanding warrants. C) it develops a methodology to handle the premium paid on exercised share options. D) it needs to value treasury stock repurchased during the year.
Which of the following statements is CORRECT?
A. When calculating the cost of preferred stock, companies must adjust for taxes, because dividends paid on preferred stock are deductible by the paying corporation. B. Because of tax effects, an increase in the risk-free rate will have a greater effect on the after-tax cost of debt than on the cost of common stock as measured by the CAPM. C. If a company's beta increases, this will increase the cost of equity used to calculate the WACC, but only if the company does not have enough reinvested earnings to take care of its equity financing and hence must issue new stock. D. Higher flotation costs reduce investors' expected returns, and that leads to a reduction in a company's WACC. E. When calculating the cost of debt, a company needs to adjust for taxes, because interest payments are deductible by the paying corporation.
Which of the following statements is false?
A) Decision models selectively describe the managerial situation. B) Decision models consider all factors from the real world. C) Decision models designate performance measures that reflect objectives. D) Decision models designate decision variables.
A contract is termed an adhesion contract when both parties adhere to it.
Answer the following statement true (T) or false (F)