If Zero-Coupon Bonds Are Available That Have an Implied Interest

question 128

Multiple Choice

If zero-coupon bonds are available that have an implied interest rate of 5 percent and a face value of $30,000, what is the approximate purchase price for those bonds?

• A) $28,571.43
• B) $30,000
• C) $1,428.57
• D) $31,428.57

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Definitions:

Section 179 Expense

A section of the IRS tax code allowing businesses to deduct the full purchase price of qualifying equipment and/or software within a tax year.

Separately Stated

Items on a tax return or financial statement that are listed individually to ensure proper treatment under tax laws or accounting rules.

Ordinary Income

Income earned from providing services or the sale of goods, as opposed to capital gains or investment income, taxed at standard rates.

Section 179 Expense

A tax deduction that allows businesses to deduct the full purchase price of qualifying equipment and/or software within a tax year.