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Difficulty:
35%
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Question Stats:
68% (01:40) correct
32%
(01:47)
wrong
based on 285
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Acme's bank loan must be immediately repaid in full if Acme's earnings fall below $1 million per year. If Acme has to repay the entire loan immediately, it will have to declare bankruptcy. Acme had seemed safe from bankruptcy, having reported annual earnings of well over $1 million in each year it has had the bank loan. However, Acme has now admitted overstating its earnings for last year, so it will have to declare bankruptcy.
The argument requires the assumption that
(A) Acme's earnings for last year, when accurately stated, are below $ I million
(B) Acme has other debts besides the bank loan
(C) last year is not the only year for which Acme overstated earnings
(D) Acme's earnings for the current year will fall below $1 million
(E) Acme would be able to avoid bankruptcy if it did not have to repay the bank loan
The argument requires the assumption that
(A) Acme's earnings for last year, when accurately stated, are below $ I million
(B) Acme has other debts besides the bank loan
(C) last year is not the only year for which Acme overstated earnings
(D) Acme's earnings for the current year will fall below $1 million
(E) Acme would be able to avoid bankruptcy if it did not have to repay the bank loan
25 Feb 2025, 16:00
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(A) Acme's earnings for last year, when accurately stated, are below $1 million.
Yes - If Acme's actual earnings were still above $1 million even after correction, the loan repayment condition would not be triggered, and Acme wouldn't necessarily face bankruptcy. The argument assumes that the corrected earnings fall below this threshold.
(B) Acme has other debts besides the bank loan.
No - The argument is solely concerned with Acme's bank loan triggering bankruptcy. Whether Acme has other debts is irrelevant to this specific reasoning.
(C) Last year is not the only year for which Acme overstated earnings.
No - Even if Acme overstated earnings in other years, it does not directly affect whether its earnings for last year fell below $1 million, which is the necessary trigger for bankruptcy.
(D) Acme's earnings for the current year will fall below $1 million.
No - The argument focuses on last year's earnings, not the current year. Even if this were true, the bankruptcy claim relies on past earnings triggering immediate loan repayment.
(E) Acme would be able to avoid bankruptcy if it did not have to repay the bank loan.
No - While this might be true, it does not fill the logical gap in the argument. The key missing link is whether last year's corrected earnings fell below $1 million.
Yes - If Acme's actual earnings were still above $1 million even after correction, the loan repayment condition would not be triggered, and Acme wouldn't necessarily face bankruptcy. The argument assumes that the corrected earnings fall below this threshold.
(B) Acme has other debts besides the bank loan.
No - The argument is solely concerned with Acme's bank loan triggering bankruptcy. Whether Acme has other debts is irrelevant to this specific reasoning.
(C) Last year is not the only year for which Acme overstated earnings.
No - Even if Acme overstated earnings in other years, it does not directly affect whether its earnings for last year fell below $1 million, which is the necessary trigger for bankruptcy.
(D) Acme's earnings for the current year will fall below $1 million.
No - The argument focuses on last year's earnings, not the current year. Even if this were true, the bankruptcy claim relies on past earnings triggering immediate loan repayment.
(E) Acme would be able to avoid bankruptcy if it did not have to repay the bank loan.
No - While this might be true, it does not fill the logical gap in the argument. The key missing link is whether last year's corrected earnings fell below $1 million.
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