If a Bond Offers $1,000 in Interest Payments at the End

question 90

Multiple Choice

If a bond offers $1,000 in interest payments at the end of each of next 5 years and a repayment of $10,000 also at the end of the 5 years and the current discount rate is 3 percent, what is the present value of the bond?

• A)$13,205
• B)$10,857
• C)$12,569
• D)$4,580

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Definitions:

Dollar Sales

The total revenue a company generates expressed in monetary terms, without taking into account the cost of goods sold.

Contribution Margin Ratio

A financial metric used to analyze the profitability of a product, calculated as (Sales - Variable Costs) / Sales.

Target Profit

Pre-determined earnings a company aims to achieve within a specific period.

Units Sold

The total number of product units that have been sold during a specific period.