On January 1, 2020, Bonds with a Face Value of $72,000

question 73

Multiple Choice

On January 1, 2020, bonds with a face value of $72,000 were sold. The bonds mature on January 1, 2030. The face interest rate is 6%. The bonds pay interest semiannually on July 1 and January
1) The market rate of interest is 10%. What is the market price of the bonds? The present value of
$1 for 20 periods at 5% is 0.377. The present value of an ordinary annuity of $1 for 20 periods at
5% is 12.462. The present value of $1 for 20 periods at 3% is 0.554. The present value of an
Ordinary annuity of $1 for 20 periods at 3% is 14.878. (Round your final answer to the nearest
Dollar.)

• A) $72,000
• B) $72,024
• C) $54,062
• D) $74,160

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Definitions:

Prime Costs

Direct materials and direct labor costs that are directly associated with the production of goods.

Factory Overhead Costs

Expenses related to operating a factory that cannot be directly traced to specific units produced, such as electricity, maintenance, and rent of the factory space.

Direct Labor Costs

Costs that are directly associated with the production of goods or services, typically wages paid to workers directly involved in manufacturing or production.

Indirect Cost

Expenses that are not directly attributable to a specific cost object, such as overhead costs.