Green Co Has Total Assets $400,000, a Cost of Borrowed Funds

question 30

Multiple Choice

Green Co. has total assets $400,000, a cost of borrowed funds of 6%, and an EBIT of $42,500. From a financial break-even perspective, Green Co. is

• A)breaking even.
• B)lower than the breakeven point.
• C)higher than the break-even point.
• D)in need of new financing.

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Definitions:

SEC

The Securities and Exchange Commission, a U.S. government agency responsible for enforcing federal securities laws and regulating the securities industry, stock and options exchanges.

Fair Value

An estimate of the market value of an asset or liability, based on the current market price or the price for similar assets.

Exchange Transactions

Transactions in which each party to the deal exchanges goods or services of comparable value; this can include trade of goods, services, or financial assets.

Tangible Assets

Physical assets that can be touched or felt, such as machinery, buildings, and land.