Stevens Company Is About to Issue $400,000 of 10-Year Bonds

question 48

Multiple Choice

Stevens Company is about to issue $400,000 of 10-year bonds paying an 8% interest rate with interest payable semiannually. The effective interest rate for such securities is 10%. Below are available time value of money factors that Stevens chooses from to calculate compounded interest.
$\begin{array}{|l|l|l|l|l|}\hline &10 \text { periods, } & 20 \text { periods, } & 10 \text { periods, } & 20 \text { periods, } \\&8 \% & 4 \% & 10 \% & 5 \%\\\hline \text { Present Value of 1 } & 0.46319 & 0.45639 & 0.38554 & 0.37689 \\\hline \text { Future Value of 1 } & 2.15892 & 2.19112 & 2.59374 & 2.65330 \\\hline \begin{array}{l}\text { Present Value of an } \\\text { Annuity of 1 }\end{array} & 6.71008 & 13.59033 & 6.14457 & 12.46221 \\\hline \begin{array}{l}\text { Future Value of an } \\\text { Annuity of 1 }\end{array} & 14.48656 & 29.77808 & 15.93743 & 33.06595 \\\hline\end{array}$
To the closest dollar, how much can Stevens expect to receive for the sale of these bonds?

• A)$350,151
• B)$292,637
• C)$800,000
• D)$1,405,503

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Definitions:

Patron

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Jarena Lee

An African American woman who is recognized as the first female preacher in the African Methodist Episcopal Church, breaking barriers in the early 19th century.

Black Proponents

Individuals who actively support or advocate for the advancement, rights, or causes of Black communities and individuals.

Colonization

The process by which one nation establishes political control over another territory, often involving the settlement of its citizens and exploitation of resources.