Which of the Following Best Describes a Term Loan

question 70

Multiple Choice

Which of the following best describes a term loan?

• A) are not split between current and long-term portions
• B) common form of long-term financing
• C) allows a company to borrow a variable amount of money
• D) not usually secured by certain assets

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Definitions:

Debt Refunding

The process of replacing old debt with new debt, often to take advantage of more favorable borrowing terms or interest rates.

NPV

Net Present Value; a financial metric used to evaluate the profitability of an investment, calculating the difference between the present value of cash inflows and outflows over a period of time.

Interest Rates

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets. Interest rates are typically noted on an annual basis, known as the annual percentage rate (APR).

After-Tax Annual Interest Savings

The amount of money saved annually on interest payments after accounting for the effects of taxes, often referenced in discussions of debt refinancing or consolidation.