Haystack, Inc

question 17

Multiple Choice

Haystack, Inc. manufactures machinery used in the mining industry. On January 2, 2015 it leased equipment with a cost of $320,000 to Silver Point Co. The 5-year lease calls for a 10% down payment and equal annual payments at the end of each year. The equipment has an expected useful life of 5 years. Silver Point's incremental borrowing rate is 10%, and it depreciates similar equipment using the double-declining balance method. The selling price of the equipment is $520,000, and the rate implicit in the lease is 8%, which is known to Silver Point Co. What is the amount of interest expense recorded by Silver Point Co. for the year ended December 31, 2015?

• A) $46,800
• B) $37,440
• C) $41,600
• D) $52,000

Understand the accounting methods and legal aspects involved in mergers and acquisitions.

Define and differentiate between various forms of corporate restructuring and defensive tactics against takeovers.

Explain the concept of synergy in the context of mergers and acquisitions.

Understand the implications of financing methods on acquisitions and their stakeholders.

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Definitions:

Bank CEO

The chief executive officer of a banking institution, responsible for the strategic direction and management of the bank.

Creative Way

An innovative or original approach to solving problems or generating new ideas.

Save Bank

A strategy or plan to conserve financial resources or prevent financial collapse.

Laying Anyone Off

The process of terminating employees due to business reasons such as cost-cutting, downsizing, or restructuring, rather than individual performance issues.