A Company Issued $1,000,000 of 10% Notes That Resulted in Interest

question 103

Multiple Choice

A company issued $1,000,000 of 10% notes that resulted in interest expense of $100,000 per year. What is the company's net cash outflow if the effective tax rate is 40%?

• A)$100,000
• B)$ 60,000
• C)$ 40,000
• D)$160,000

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Definitions:

Defense Mechanisms

Psychological strategies used unconsciously to protect oneself from anxiety arising from unacceptable thoughts or feelings.

Implicit Memories

Implicit memories are memories that influence our behaviors without conscious awareness, such as skills and procedures acquired through experience.

Achievement Motivation

A desire for significant accomplishment, for mastery of skills or ideas, for control, and for attaining a high standard.

Affiliation Motivation

A social motivation that drives individuals to want to belong to or be accepted by a group.