A bank loaned Peggy Chalmers $3,000 at 13.5% ordinary interest for 90 days. Find the amount of interest she owed on the loan
A. $405
B. $101.25
C. $10.13
D. $40.50
Answer: B. $101.25
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Which of the following statements about the business income coverage form is true?
A) Business income is defined as gross earnings before taxes. B) Payroll is excluded unless it is specifically added. C) The form covers loss of business income and extra expenses incurred during restoration. D) The form can be used by a manufacturing operation only.
Consider the following statements about the investment in working capital in a capital budgeting analysis:Working capital often increases as the result of higher balances in accounts receivable or inventory necessary to support a project. Working capital increases are sources of cash and should be included in a discounted-cash-flow analysis. The time 0 cash investment in working capital is included in a discounted-cash-flow analysis as a cash outflow. Which of the above statements is (are) correct?
A. III only. B. I and II. C. I and III. D. I only. E. II only.
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Indicate whether the statement is true or false
Two operationally similar companies, HD and LD, have identical amounts of assets, operating income (EBIT), tax rates, and business risk. Company HD, however, has a much higher debt ratio than LD. Company HD's basic earning power ratio (BEP) exceeds its cost of debt (rd). Which of the following statements is CORRECT?
a. Company HD has a higher times interest earned (TIE) ratio than Company LD. b. Company HD has a higher return on equity (ROE) than Company LD, and its risk, as measured by the standard deviation of ROE, is also higher than LD's. c. The two companies have the same ROE. d. Company HD's ROE would be higher if it had no debt. e. Company HD has a higher return on assets (ROA) than Company LD.