At the beginning of the year, MECCS Inc. had long-term debt of$1,893 and total debt...

At the beginning of the year, MECCS Inc. had long-term debt of $1,893 and total debt of $3,685. At the end of the year, the long-term debt is $1,581 and total debt is $3,192. If $993 of interest was paid during the year, what is the cash flow to creditors? Group of answer choices

$500

$681

$1,486

$1,305

Expert Solution

Cash Flow to creditors is Interest Pat=yment - Net Borrowing

Here the Total debt decreased from 3,685 to 3,192. So there is Debt Repayment and not borrowing. Repayment will be added in Interest payment to get total cash flow to creditors.

Debt Repayment = Opening Debt - Closing Debt

= 3,685 - 3,192

= 493

Cash Flow to Creditors = Interest Payment + Debt Repayment

= 993 + 493

= 1486

So the correct option is 1,486

jeff jeffy answered 2 years ago

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