Today Is January 1, 2009

question 18

Multiple Choice

Today is January 1, 2009. The state of Iowa has offered your firm a subsidized loan. It will be in the amount of $10,000,000 at an interest rate of 5% and have ANNUAL (amortizing) payments over 3 years. The first payment is due December 31, 2009 and your taxes are due January 1 of each year on the previous year's income. The yield to maturity on your firm's existing debt is 8%. What is the APV of this subsidized loan? Note that I did not round my intermediate steps. If you did, your answer may be off by a bit. Select the answer closest to yours.

• A)-$3,497,224.43
• B)$417,201.05
• C)$840,797
• D)None of the above

Identify the impact of cost behavior on decision-making and financial performance.

Grasp the classification of costs for decision-making, including relevant and sunk costs.

Differentiate between the treatment of costs in managerial and financial accounting.

Recognize the effect of activity levels on cost per unit and the importance of the relevant range in cost analysis.

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Definitions:

Single Point

In the context of focus or attention, concentrating all effort and attention on one task or objective without distraction.

Thomas And Chess's

Psychologists who developed the Temperament Theory, which suggests that individual differences in behavior are often biologically based and appear early in life.

Temperament

An individual's natural predisposition towards certain patterns of behavior and emotional reactions, often observed from a young age.

Easy

NOT a key term without context.