The Current Carrying Value of Kennett's $800,000 Face Value Bonds

question 140

Multiple Choice

The current carrying value of Kennett's $800,000 face value bonds is $797,000.If the bonds are retired at 102, what would be the amount Kennett would pay its bondholders?

• A)$797,000
• B)$800,000
• C)$804,000
• D)$816,000

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Definitions:

Differential Costs

The difference in total cost that will result from selecting one choice over another.

Sunk Costs

Sunk costs refer to money already spent and permanently lost, which cannot be recovered and should not influence future financial decisions.

Opportunity Costs

A rephrased definition: The potential gains or benefits that are lost when choosing one alternative over another in decision-making.

Gross Margin

The difference between sales revenue and the cost of goods sold, expressed as a percentage of sales revenue.