Compute the Present Value of a Debenture

question 26

Multiple Choice

Compute the present value of a debenture. The principal amount is $50 000, the stated rate is 3%, and the term of the debenture is 6 years. The debenture pays interest half- yearly. At the time of issue, the market rate is 4%. Please compute the present value of the debenture at market rate using the present value tables.

• A)$47 331
• B)$7 931
• C)$59 000
• D)$39 400

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Definitions:

Direct Labor

The labor costs directly tied to the production of goods or services, such as wages for employees on the production line.

Direct Labor Rate Variance

The difference between the actual cost of labor per hour and the standard cost, multiplied by the total hours worked, used to assess labor cost management.

Standard Hours

Standard hours refer to the set amount of time expected to complete a task or job based on efficiency standards.

Work in Process Inventory

Represents goods that are partially completed in the manufacturing process, not yet ready for sale.