On January 1, 2009, Your Brother's Business Obtained a 30-Year

question 31

Multiple Choice

On January 1, 2009, your brother's business obtained a 30-year amortized mortgage loan for $250,000 at a nominal annual rate of 7.0%, with 360 end-of-month payments. The firm can deduct the interest paid for tax purposes. What will the interest tax deduction be for 2009?

• A) $17,419.55
• B) $17,593.75
• C) $17,769.68
• D) $17,947.38
• E) $18,126.85

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Definitions:

Total Liabilities

The total of all financial obligations owed by a business to creditors, including loans, accounts payable, and other debts.

Retained Earnings

The portion of a company's profits that are not distributed as dividends to shareholders but are kept by the company for reinvestment.

Retained Earnings

The portion of a company's profits that is kept or retained and not paid out as dividends to shareholders.

Dividends

Payments made by a corporation to its shareholder members. It is the share of profits and retained earnings that the company pays out to its shareholders.