A Company Issued 7%, 5-Year Bonds with a Par Value

question 200

Multiple Choice

A company issued 7%, 5-year bonds with a par value of $100,000. The market rate when the bonds were issued was 7.5%. The company received $97,947 cash for the bonds. Using the effective interest method, the amount of interest expense for the first semiannual interest period is:

• A) $3,673.01.
• B) $3,705.30.
• C) $7,000.00.
• D) $7,346.03.
• E) $3,500.00.

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Definitions:

Social Psychology Theory

A framework within social psychology that explores how people's thoughts, feelings, and behaviors are influenced by the actual, imagined, or implied presence of others.

Robber's Cave Experiment

A social psychology study by Muzafer Sherif that demonstrated how intergroup conflict can arise from competition for resources and how it can be overcome through cooperative tasks.

Us-them Hostility

This refers to feelings of antagonism and opposition between different groups, often highlighting social or cultural divisions.

Realistic Conflict Theory

A social psychological model stating that intergroup conflicts arise when groups compete over scarce resources, leading to prejudice and discrimination.