Franklin Company Obtained a $160,000 Line of Credit from the State

question 79

Multiple Choice

Franklin Company obtained a $160,000 line of credit from the State Bank on January 1, Year 1. The company agreed to accept a variable interest rate that was set at 2% above the bank's prime lending rate. The bank's prime rate of interest and the amounts borrowed or repaid during the first three months of Year 1 are shown in the following table. Assume that Franklin borrows or repays on the first day of each month. Borrowing is shown as a positive amount and repayments are shown as negative amounts indicated by parentheses. $\begin{array}{lrr}&\text { Amount Borrowed (Repaid) }&\text { Prime Rate for the Month }\\1 \text {-January } & \$ 40,000 & 4.0 \% \\\text { 1-February } & (10,000) & 4.5\% \\\text { 1-March } & 40.000 & 5.0 \%\end{array}$
Based on this information alone, the amount of interest expense recognized in March would be closest to:

• A) $232.
• B) $262.
• C) $292.
• D) $408.

Understand the motivations behind certain real estate investments such as land subdivision and vacation homes.

Comprehend the concept of a real estate syndicate and the benefits of professional management.

Recognize the liquidity and cash flow considerations in real estate investments.

Understand the concept of corporate social responsibility and its dimensions.

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