Burlingame Co

question 214

Multiple Choice

Burlingame Co.is purchasing a new forklift to be used in its warehousing operations.Burlingame borrowed $120,000 from its bank in return for an installment note with 8% interest.Burlingame will make 6 equal annual payments of $25,958.Interest expense for the second period equals:

• A)$17,667.
• B)$9,600.
• C)$8,291.36.
• D)$25,958.

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Definitions:

Discount

Generally a reduction in price or value. In finance, a reduction in the present value of a future sum due to the action of interest.

Net

Refers to the amount remaining after all deductions are made, such as taxes, expenses, and costs.

Short-Term Debt

Debts due for payment within the next fiscal year.

Financing

The act of providing funds for business activities, making purchases, or investing, through various means such as loans, equity, credits, or grants.