Rick Bought a Bond When It Was Issued by Macroflex

question 12

Multiple Choice

Rick bought a bond when it was issued by Macroflex Corporation 14 years ago. The bond, which has a $1,000 face value and a coupon rate equal to 10 percent, matures in six years. Interest is paid every six months; the next interest payment is scheduled for six months from today. Assuming the yield on similar risk investments is 14 percent, calculate the current market value (price) of the bond. 

• A)$841.15
• B)$1,238.28
• C)$904.67
• D)$757.26
• E)$844.45

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Definitions:

Machine-Hours

A measure of production or work time, referring to the total hours a machine is operated in the performance of its tasks.

Overhead Cost

Indirect costs related to the general operation of a business and not directly tied to a specific product or service.

Activity-Based Costing

A costing method that assigns overhead and indirect costs to specific activities, providing a more accurate reflection of the resources consumed to produce a product or service.

Activity Rate

The cost driver rate used in activity-based costing to allocate costs to products or services based on specific activities.