Calculate the ALE Based on the Following Information

question 35

Multiple Choice

Calculate the ALE based on the following information:
The SLE is 4 million dollars.
The ARO is 5%.
What is the ALE?

• A)4.5 million dollars
• B)2 million dollars
• C)200,000 dollars
• D)4,200,000 dollars

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Definitions:

Subsidiary Company

A company that is completely or partially owned and wholly controlled by another company, which is referred to as the parent company.

Cost Method

An accounting method for investments where the investment is recorded at the purchase cost, without recognizing subsequent changes in market value.

Semiannual Receipt

Payments or incomes that are received twice a year.

Accrued Interest

The amount of interest that has been incurred but not yet paid over a particular period.