Issuing Additional Long-Term Debt of $5 Million and Buying New

question 8

Multiple Choice

Issuing additional long-term debt of $5 million and buying new long-term assets worth $5 million will result in a net cash flow of:

• A) $5 million.
• B) $10 million.
• C) Zero.
• D) $15 million.

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Definitions:

Corporation

A legal entity that is separate and distinct from its owners, capable of owning property, entering into contracts, and being sued.

Promoters

Individuals or companies that engage in the organization and finance of business ventures, events, or performances.

Corporate Form

A legal structure for businesses that is recognized as a separate legal entity from its owners, providing liability protection and other benefits.

Duties

Responsibilities or obligations required by one's role, job, or by law.