In a period of rising prices, the inventory method which tends to give the highest reported net income is

Policy loans on cash value insurance

A) are permitted only if the insured is likely to die within one year. B) are typically made at rates substantially above those on unsecured personal loans. C) are a convenient source of liquidity. D) do not reduce the payout at time of death.

Mountain Retreat and Resort is undergoing a major expansion. The expansion will be financed by

issuing new 15-year, $1,000 par, 9% annual coupon bonds. The market price of the bonds is $1,070 each. The firm's flotation expense on the new bonds will be $50 per bond. The firm's marginal tax rate is 35%. What is the relevant cost of the new bonds for capital budgeting purposes? A) 5.14% B) 8.45% C) 5.69% D) 4.82%