The Total Interest Owing on a $10,000, 4%, 3-Month Note

question 26

Multiple Choice

The total interest owing on a $10,000, 4%, 3-month note receivable is

• A)$100.
• B)$200.
• C)$400.
• D)$1,200.

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Definitions:

Times Interest Earned Ratio

A financial metric assessing a company’s ability to meet its interest obligations from its operating income.

Income Tax Payments

Income tax payments are the amounts of money a company or individual must pay to the government, based on the income earned over a tax period.

Interest Expense

The cost incurred by an entity for borrowed funds, reflecting the interest payments on debts.

Debt-To-Equity Ratio

The debt-to-equity ratio is a measure of financial leverage, indicating the proportion of company financing that comes from creditors and investors, calculated as total liabilities divided by shareholders' equity.