You plan to borrow $35,000 at a 7.5% annual interest rate. The terms require you to amortize the loan with 7 equal end-of-year payments. How much interest would you be paying in Year 2?
A. $1,994.49
B. $2,099.46
C. $2,209.96
D. $2,326.27
E. $2,442.59
Answer: D
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a. increases the return to the common shareholders during good earnings years. b. uses lower cost borrowed funds to earn a higher rate of return on those funds than their cost. c. decreases the return to the common shareholders during bad earnings years. d. all of the above e. none of the above
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Indicate whether the statement is true or false
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