Cooper's Inventory Has Been Financed 100% with a Long-Term Note

question 113

Multiple Choice

Cooper's inventory has been financed 100% with a long-term note. The note is coming due in 2016. Cooper has received a commitment from a new lender that permits five-year refinancing of debt up to an amount equal to 50% of inventory, which is expected to range between $14,000 and $20,000 in 2016. At December 31, 2015, how much of the company's currently maturing note payable can be classified as long-term debt?

• A) $7,000
• B) $6,000
• C) $10,000
• D) $9,000

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Definitions:

Random

Lacking any definite plan, purpose, or pattern, often used in the context of selection or occurrence.

First Serves

In tennis, the initial serve attempt in a point, which, if successful, initiates the rally.

Probability

The mathematical likelihood of a specific event occurring, often expressed as a number between 0 and 1.

Independent Events

Two or more events whose occurrence or outcome do not affect each other's probability of happening.