If a Business Takes Out a $10,000,7 Year,12% Loan,the Decrease

question 24

Multiple Choice

If a business takes out a $10,000,7 year,12% loan,the decrease in principal in year 1 is: (assume annual payments) .

• A) $991.17
• B) $1,976.38
• C) $1,200.00
• D) $2,191.17
• E) $2,456.54

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Definitions:

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the business's normal operating cycle if longer than a year.

Short-term Note

A financial instrument typically due for repayment within one year, often used for short-term financing needs.

Long-term Debt

Refers to loans or other forms of financial obligations that are due for repayment beyond the next year or operating cycle.

Assets Financed

The acquisition of assets (e.g., equipment, property) using debt or other financial instruments rather than direct payment.