Juan Paid the Following Amounts of Interest in 2014: $150

question 67

Multiple Choice

Juan paid the following amounts of interest in 2014: $150 on his personal credit card
$9,500 on his home mortgage
$750 on a personal car loan,which was not used for business
$350 on funds borrowed to purchase tax-exempt securities
What is his deductible interest for 2014?

• A)$ 350.
• B)$1,250.
• C)$9,500.
• D)$9,850.

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Definitions:

External Financing Need

The amount of funding required by a firm to cover investments and growth not financed by internal cash flows.

Net Working Capital

The difference between a company's current assets and current liabilities, indicating short-term financial health and the ability to fund day-to-day operations.

Sustainable Growth Rate

The sustainable growth rate is a measure of how quickly a firm can expand its operations without needing to secure additional financing or significantly alter its financial structure.

Debt-equity Ratio

A measure representing the balanced usage of debt and shareholders' equity in funding company assets.