Which of the following is not an example of a negative covenant provision? Multiple Choice • Limits the use of the loan to an agreed-upon purpose. • Limits on capital expenditures. • Restricts the payment of cash dividends. • Limits on the borrower's total indebtedness. Island Corporation owes Mutual Bank a 10% note payable for $100,000 plus $8,000 accrued interest. On October 1, 20X1. Island and Mutual Bank execute an agreement whereby Island will pay Mutual $128,000 on the due date of the note on October 1, 20X3. What effective interest rate will Island use for the restructured note? Multiple Choice • 8.7% 10.0% 13.1% 8.9%
Which of the following is not an example of a negative covenant provision? Multiple Choice • Limits the use of the loan to an agreed-upon purpose. • Limits on capital expenditures. • Restricts the payment of cash dividends. • Limits on the borrower's total indebtedness. Island Corporation owes Mutual Bank a 10% note payable for $100,000 plus $8,000 accrued interest. On October 1, 20X1. Island and Mutual Bank execute an agreement whereby Island will pay Mutual $128,000 on the due date of the note on October 1, 20X3. What effective interest rate will Island use for the restructured note? Multiple Choice • 8.7% 10.0% 13.1% 8.9%
Chapter4: Income Exclusions
Section: Chapter Questions
Problem 61P
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Transcribed Image Text:Which of the following is not an example of a negative covenant provision?
Multiple Choice
•
Limits the use of the loan to an agreed-upon purpose.
• Limits on capital expenditures.
• Restricts the payment of cash dividends.
• Limits on the borrower's total indebtedness.
Island Corporation owes Mutual Bank a 10% note payable for $100,000 plus $8,000 accrued interest. On October 1, 20X1. Island and Mutual Bank execute an agreement whereby Island will pay Mutual $128,000 on the due date of the
note on October 1, 20X3.
What effective interest rate will Island use for the restructured note?
Multiple Choice
• 8.7%
10.0%
13.1%
8.9%
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