Exhibit 11.3 Use the Information Below for the Following Problem(S)

question 2

Multiple Choice

Exhibit 11.3
Use the Information Below for the Following Problem(S)
A large grocery chain is reevaluating its bonds since it is planning to issue a new bond in the current market. The firm's outstanding bond issue has 6 years remaining until maturity. The bonds were issued with a 6 percent coupon rate (paid semiannually) and a par value of $1,000. Because of increased risk the required rate has risen to 10 percent.
-Refer to Exhibit 11.3.What will be the value of these securities in one year if the required return declines to 8 percent?

• A) $899.43
• B) $862.50
• C) $869.88
• D) $918.93
• E) $946.98

Understand the benefits and risks associated with short-term vs. long-term financing.

Identify methods to manage accounts receivable and inventory to improve cash flow.

Analyze the effects of financing decisions on business risk and return.

Learn the implications of not taking discounts on trade credit.