Riley Co Is Considering a Short-Term or Long-Term Financing Plan of of $4,000,000

question 91

Multiple Choice

Riley Co. is considering a short-term or long-term financing plan of $4,000,000 assets. It expects the following one-year interest rates over the next three years: 6.5%, 7.75%, and 9%. The long-term interest rate will be 7.5% during those three years. What will be the difference in interest costs over the three years?

• A) Long-term interest will be $630,000 more than short-term interest.
• B) Long-term interest will be $30,000 less than short-term interest.
• C) Long-term interest will be $140,000 less than short-term interest.
• D) None of the options are true.

---

Definitions:

Good Faith

The assumption that parties in a transaction will act honestly and not seek to deceive or defraud each other.

Primary Boycott

A boycott against an employer with whom the union is directly engaged in a labor dispute.

Labor Dispute

A disagreement between workers and their employer, often over wages and working conditions.

Representation Election

A process in labor relations where workers vote to decide whether they wish to be represented by a union.