Polaris Industries Is Forecasting Its Financial Statements for Year 6

question 1

Multiple Choice

Polaris Industries is forecasting its financial statements for Year 6. Selected financial information for Year 5 is provided in the table. What is the interest expense for Polaris Industries in Year 6? (Assume that Polaris Industries average cost of debt is 11.76%.) Selected Financial Information
Polaris Industries Inc. ($ '000)
$$\begin{array} { | c | c | } \hline & \text { Year 5 } \\\hline \text { Long Term Debt } & 18,000 \\\hline \text { Interest Expense } & 1,350 \\\hline\end{array}$$

• A)$2,117
• B)$2,347
• C)$3,114
• D)$4,139
• E)$4,234

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Definitions:

Preference Rights

A set of privileges or priorities given to shareholders, such as the right to purchase new shares before the general public.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, usually with fixed dividends.

Dividends

Portions of a corporation's earnings distributed to shareholders as a reward for their investment.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, representing ownership interest.