Chenard Company Is About to Issue $3,000,000 of 8-Year Bonds

question 101

Multiple Choice

Chenard Company is about to issue $3,000,000 of 8-year bonds paying a 12% interest rate with interest payable semiannually. The discount rate for such securities is 10%. Below are time value of money factors that Chenard uses to calculate compounded interest. To the closest dollar, how much can Chenard expect to receive for the sale of these bonds?

• A) $3,193,390
• B) $2,293,710
• C) $3,325,130
• D) $5,400,000

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Definitions:

Nominal Consideration

A token amount in a contract to validate it, which may not necessarily reflect the true value of the contract's subject matter.

Consideration

Something of value (such as money, service, promise, or goods) that is given by both parties to a contract that compels mutual obligation.

Charitable Purpose

involves activities carried out for the benefit of the public, such as alleviating poverty, advancing education, religion, or other activities serving the public interest.

Promised Gift

A commitment to transfer ownership of an item or property to someone else without expecting something in return.