Use the Present Value and Future Value Tables Included in Appendix

question 12

Multiple Choice

Use the present value and future value tables included in Appendix 8 and on the textbook companion website.
-On January 1, 2012, Cabuki Corporation issued $500,000 of 10 percent, 10-year bonds at 88.5. Interest is payable on December 31. If the market rate of interest was 12 percent at the time the bonds were issued, how much cash was paid for interest in 2012?

• A) $44,250
• B) $50,000
• C) $53,100
• D) $60,000

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Definitions:

Bundling

The practice of selling two or more products or services together as a single package, often at a discounted rate.

All-you-can-eat Salad Bar

A service model in restaurants where customers pay a fixed price to consume as much salad as they wish from a variety of options.

Price Discrimination

The strategy of selling the same product to different customers at different prices based on willingness to pay.

Tying

A sales practice where a seller requires the purchase of one product to buy another, often used to leverage market power from one product to promote another.