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3. Kansas Enterprises purchased equipment for $73,000 on January 1, 2021. The equipment is expected to have a ten-year service life, with a residual value

3.

Kansas Enterprises purchased equipment for $73,000 on January 1, 2021. The equipment is expected to have a ten-year service life, with a residual value of $6,900 at the end of ten years. Using the straight-line method, depreciation expense for 2021 would be:

7.

The Pita Pit borrowed $201,000 on November 1, 2021, and signed a six-month note bearing interest at 12%. Principal and interest are payable in full at maturity on May 1, 2022. In connection with this note, The Pita Pit should report interest expense at December 31, 2021, in the amount of: (Do not round your intermediate calculations.)

8.

Which of the following is not an advantage of debt financing?

Multiple Choice

  • Interest is tax deductible.

  • The cost of borrowing may be lower than the return on equity.

  • The ownership interest of current stockholders is unchanged.

  • Debt financing often has no maturity date.

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