On October 1, 2019, Springfield, Inc

question 67

Multiple Choice

On October 1, 2019, Springfield, Inc. made a loan to one of its customers. The customer signed a 6-month note for $140,000 at 15%. How much interest revenue did the company record in 2020 for this note? (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)

• A) $7,000
• B) $3,500
• C) $5,250
• D) $10,500

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Definitions:

Cost of Equity

The rate of return that a company theoretically pays to its equity investors to compensate for the risk they undertake by investing in the company.

Cost of Equity

The return that investors expect for investing in a company's equity, considered the cost of equity capital.

Security Market Line

A representation in financial models that shows the relationship between the risk of an investment and its expected return.

Dividend Payout Ratio

A metric that measures the portion of a company's earnings paid out to shareholders as dividends.