UOP, a Petroleum Processing Technology Firm, Issued a 10% Coupon

question 112

Multiple Choice

UOP, a petroleum processing technology firm, issued a 10% coupon, 20 year to maturity first mortgage bond five years ago.If the current market rate of debt for UOP is 8%, at what price should this bond sell, to the nearest dollar? Assume a par value of $1,000, and pays interest semi-annually.

• A)$1,170.
• B)$999
• C)$1,095
• D)$1,173

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Definitions:

Period Costs

Expenses directly tied to a specific time period, such as rent, utilities, and administrative salaries, and not directly to the production process.

Units Sold

The number of individual items that have been sold over a specified period.

Period Costs

Costs that are not directly related to the manufacturing process and are charged as expenses in the period they arise.

Units Sold

The total quantity of a company's product that was sold during a specified period.