The correct option. Given information Face value of bond issued by Company C is $1,000,000. Maturity period is 10 years. Coupon rate is 9%. Effective rate of interest is 8%. Present value of $1 at 8% for 10 years is 0.4632. Present value of an ordinary annuity of $1 at 8 % for 10 years is 6.7101.

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Answer 1

Question

Chapter 14, Problem 14.5MC

To determine

The correct option.

Given information

Face value of bond issued by Company C is $1,000,000.

Maturity period is 10 years.

Coupon rate is 9%.

Effective rate of interest is 8%.

Present value of $1 at 8% for 10 years is 0.4632.

Present value of an ordinary annuity of $1 at 8 % for 10 years is 6.7101.

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Answer 2

Question

Chapter 14, Problem 14.5MC

To determine

The correct option.

Given information

Face value of bond issued by Company C is $1,000,000.

Maturity period is 10 years.

Coupon rate is 9%.

Effective rate of interest is 8%.

Present value of $1 at 8% for 10 years is 0.4632.

Present value of an ordinary annuity of $1 at 8 % for 10 years is 6.7101.

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Answer 3

Question

Chapter 14, Problem 14.5MC

To determine

The correct option.

Given information

Face value of bond issued by Company C is $1,000,000.

Maturity period is 10 years.

Coupon rate is 9%.

Effective rate of interest is 8%.

Present value of $1 at 8% for 10 years is 0.4632.

Present value of an ordinary annuity of $1 at 8 % for 10 years is 6.7101.

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Answer 4

Question

Chapter 14, Problem 14.5MC

To determine

The correct option.

Given information

Face value of bond issued by Company C is $1,000,000.

Maturity period is 10 years.

Coupon rate is 9%.

Effective rate of interest is 8%.

Present value of $1 at 8% for 10 years is 0.4632.

Present value of an ordinary annuity of $1 at 8 % for 10 years is 6.7101.

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Answer 5

Chapter 14, Problem 14.5MC

To determine

The correct option.

Given information

Face value of bond issued by Company C is $1,000,000.

Maturity period is 10 years.

Coupon rate is 9%.

Effective rate of interest is 8%.

Present value of $1 at 8% for 10 years is 0.4632.

Present value of an ordinary annuity of $1 at 8 % for 10 years is 6.7101.

Answer 6

Chapter 14, Problem 14.5MC

To determine

The correct option.

Given information

Face value of bond issued by Company C is $1,000,000.

Maturity period is 10 years.

Coupon rate is 9%.

Effective rate of interest is 8%.

Present value of $1 at 8% for 10 years is 0.4632.

Present value of an ordinary annuity of $1 at 8 % for 10 years is 6.7101.

Answer 7

Chapter 14, Problem 14.5MC

To determine

The correct option.

Given information

Face value of bond issued by Company C is $1,000,000.

Maturity period is 10 years.

Coupon rate is 9%.

Effective rate of interest is 8%.

Present value of $1 at 8% for 10 years is 0.4632.

Present value of an ordinary annuity of $1 at 8 % for 10 years is 6.7101.

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 14 - What conditions or terms does a note payable...Ch. 14 - If the market rate of interest exceeds the face or...Ch. 14 - What is included in bond issue costs and how...Ch. 14 - Prob. 14.4Q Ch. 14 - When a bond is issued at a discount, will its...Ch. 14 - Prob. 14.6Q Ch. 14 - Prob. 14.7Q Ch. 14 - Under IFRS, how do firms account for convertible...Ch. 14 - Prob. 14.9Q Ch. 14 - Can companies reclassify short-term debt expected...

The correct option. Given information Face value of bond issued by Company C is $1,000,000. Maturity period is 10 years. Coupon rate is 9%. Effective rate of interest is 8%. Present value of $1 at 8% for 10 years is 0.4632. Present value of an ordinary annuity of $1 at 8 % for 10 years is 6.7101.

Solution Summary: The author explains that the correct option is d. The selling price of bond is calculated by adding current value of future interest payment and present value factor of annuity.

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Chapter 14 Solutions