On January 1, Your Company Issues a 5-Year Bond with a Face

question 133

Multiple Choice

On January 1, your company issues a 5-year bond with a face value of $10,000 and a stated interest rate of 7%. The market interest rate is 5%. The issue price of the bond was $10,866. Using the effective-interest
Method of amortization and rounding to the nearest dollar, the interest expense for the first year ended
December 31 would be:

• A) $700.
• B) $543
• C) $667.
• D) $759

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Definitions:

Organizational Commitment

The psychological attachment or loyalty of an employee towards their organization.

Seniority

A measure of how long an individual has been with an organization or in a specific position, often influencing their rank and privileges.

Positive Emotions

Feelings that are subjectively considered to be positive, such as joy, gratitude, and love, often leading to increased well-being and life satisfaction.

Organizational Effectiveness

The degree to which an organization achieves its goals and meets the needs of its stakeholders through efficient use of resources.