Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

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Multiple Choice

Which of the following captures the main factor to consider when refinancing a loan at a lower interest rate?

The number of shareholders in the company

The original maturity date of the loan

The current balance in the company's cash account

The total cost of refinancing, including fees and penalties

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Verified step by step guidance

Understand the concept of refinancing: Refinancing a loan involves replacing an existing loan with a new one, typically to take advantage of a lower interest rate. However, it is important to evaluate the total cost of refinancing, which includes fees, penalties, and other associated costs.

Identify the key factor: The main factor to consider when refinancing is not just the lower interest rate but the total cost of refinancing. This includes prepayment penalties for the old loan, origination fees for the new loan, and any other administrative costs.

Analyze the financial impact: Calculate the savings from the lower interest rate over the remaining term of the loan. Compare these savings to the total refinancing costs to determine if refinancing is financially beneficial.

Consider the loan's original maturity date: While the maturity date is not the main factor, it can influence the decision. For example, refinancing may be less beneficial if the loan is close to its maturity date, as the interest savings may not outweigh the refinancing costs.

Evaluate the company's financial position: Although the current balance in the company's cash account is not the main factor, it is important to ensure the company has sufficient liquidity to cover refinancing costs without jeopardizing its financial stability.