Which of the Following Statements Is FALSE

question 12

Multiple Choice

Which of the following statements is FALSE?

• A)The equivalent after-tax interest rate is r - (τ × r).
• B)Interest rates vary based on the identity of the borrower.
• C)The ability to deduct the interest expense increases the effective after-tax interest rate paid on the loan.
• D)For loans to borrowers other than the U.S.Treasury,the stated interest rate is the maximum amount that investors will receive.

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Definitions:

Payables Policy

A company's set of guidelines or practices for managing its accounts payable, including terms of payment and prioritizing of payments.

Sales Policy

The strategic approach and guidelines a company follows for selling its products or services.

Operating Cash Flows

The cash generated by a company’s normal business operations.

Payment Obligation

A financial commitment that requires a party to pay a certain amount of money by a specified date.