If a Company Borrows Money from a Bank,the Interest Paid

question 123

Multiple Choice

If a company borrows money from a bank,the interest paid on this loan should be reported on the statement of cash flows as a(n) :

• A)Operating activity.
• B)Investing activity.
• C)Financing activity.
• D)Noncash investing and financing activity.
• E)None of these.This is not reported in the statement of cash flows.

---

Definitions:

Liquidity

The simplicity of turning an asset into cash without impacting its market value.

Terminal Value

An estimate of a project's or company's value at the end of a forecast period, extending beyond the period of explicit cash flow projections.

Non-Normal Cash Flows

Cash flow patterns that don't follow a regular, predictable pattern, often encountered in investment analysis.

MIRR

Modified Internal Rate of Return, a financial metric that accounts for the cost of capital and assumes positive cash flows are reinvested at a firm's reinvestment rate.