On January 1,Southwest Company Accepted a One-Year Note for $60,000

question 230

Multiple Choice

On January 1,Southwest Company accepted a one-year note for $60,000 at 8% from one of its customers.When the note matured on December 31,the customer was unable to pay,and the company recorded the dishonor.The amount of the debit recorded on December 31 is ________.

• A) $55,200
• B) $4800
• C) $60,000
• D) $64,800

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Definitions:

Risk Level

The degree of uncertainty associated with an investment's returns, reflecting the potential for loss or lower than expected performance.

Cost of Equity

The return a company requires to decide if an investment meets capital return requirements, often used in capital budgeting.

Risk-Free Rate

A benchmark interest rate at which an investment is expected to yield a return without any risk of financial loss, usually associated with government securities.

Market Risk Premium

The extra return that investors require for choosing to invest in the general market rather than risk-free investments.