Augusta Company Reported That Its Bonds with a Face Value

question 122

Multiple Choice

Augusta Company reported that its bonds with a face value of $40,000 and a carrying value of $42,400 are retired for $44,800 cash.The amount to be reported under cash flows from financing activities is:

• A)($42,400).
• B)($2,400).
• C)($44,800).
• D)$0;this is an operating activity.

---

Definitions:

Cost of Equity Capital

This refers to the return that investors require on their equity investment in a company, effectively the cost for a company to maintain equity financing.

Future Growth Opportunities

Potential avenues or prospects that can lead to an expansion of a business's operations and an increase in its profitability.

Cost of Equity Capital

The return that investors require for an investment in a company's equity, reflecting the compensation for taking on equity risk.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment’s cost.