1. Gammell Company issued $51,400 of 9% bonds with annual interest payments. The bonds mature in ten years. The bonds were issued at $48,700. Gammel Company uses the straight-line method of amortization. How much is the annual interest expense?

$4,896.

$4,356.

$4,813.

$4,626.

2. Short Company purchased land by paying $18,000 cash on the purchase date and agreeing to pay $18,000 for each of the next eight years beginning one-year from the purchase date. Short's incremental borrowing rate is 14%. On the balance sheet as of the purchase date, after the initial $18,000 payment was made, the liability reported is closest to: (Table A.1, Table A.2, Table A.3, and Table A.4) (Use appropriate factor(s) from the tables provided.)

$50,481.

$144,000.

$83,500.

$101,500.

3. Wildlife Co. reported net income of $12.30 million, interest expense of $0.66 million and is are in a 30% tax rate bracket. Wildlife's average total assets are $81.80 million and average stockholders' equity is $51.80 million. Wildlife's financial leverage percentage is closest to: (Do not round intermediate computations)

9.0%

8.7% (not 8.7%?)

7.9%

8.1%