TechCom Receives a 10%, 90-Day Note for $2,500

question 35

Multiple Choice

TechCom receives a 10%, 90-day note for $2,500. The interest on the note is

• A) $36.99
• B) $50.00
• C) $58.79
• D) $61.64
• E) $87.50

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Definitions:

Premium

An amount paid in addition to a standard price or rate, or the amount above par value for a security.

Bond Interest Expense

The cost incurred by an issuer of bonds for the interest payments made to bondholders over a period.

Amortization

The process of spreading out a loan into a series of fixed payments over time or the gradual writing off of the initial cost of an intangible asset.

Bond Premiums

The amount by which the price of a bond exceeds its face value.