Exhibit 11.1 Use the Information Below for the Following Problem(S)

question 38

Multiple Choice

Exhibit 11.1
Use the Information Below for the Following Problem(S)
A major retailer is reevaluating its bonds since it is planning to issue a new bond in the current market. The firm's outstanding bond issue has 8 years remaining until maturity. The bonds were issued with a 6.5 percent coupon rate (paid quarterly) and a par value of $1,000. The required rate of return is 4.25 percent.
-Refer to Exhibit 11.1.What is the current value of these securities?

• A) $1149.94
• B) $433.15
• C) $1151.92
• D) $860.50
• E) $863.35

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Definitions:

Positive Economic Statement

An objective statement based on fact that can be tested and validated.

Government Spending

Expenditures made by the government for its operations, programs, and public services.

Taxes

Mandatory contributions to state revenue, levied by the government on workers' income, business profits, or added to the cost of some goods, services, and transactions.

National Income

The total amount of money earned within a country from production and services over a specific time period.