A Corporation Issues $100,000, 10%, 5-Year Bonds on January 1

question 135

Multiple Choice

A corporation issues $100,000, 10%, 5-year bonds on January 1, 2014 for $108,111, at a price to yield 8%. Interest is paid semi-annually on January 1 and July 1. The amount of premium amortized on July 1, 2014 is

• A) $5,000
• B) $4,324
• C) $676
• D) $8,649

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Definitions:

Marginal Cost Curves

A graphical representation that shows how the cost of producing one more unit of a good or service varies as production increases.

Market Supply Curve

A graphical representation showing the total quantity of a good or service that suppliers are willing and able to sell at different prices.

Producer Surplus

The difference between the amount that producers are willing and able to sell a good for and the actual amount they receive in the market.

Economic Rent

Income derived from the possession of a unique resource, exceeding that which is needed to keep the resource in its current employment.