ABC Corp'S Balance Sheet Shows Their Long-Term Debt to Be $10

question 91

Multiple Choice

ABC Corp.'s balance sheet shows their long-term debt to be $10 million.The debt was issued with a 10 percent interest rate, and the current interest rate is 7 percent.Based on this information, the market value of this debt would be:

• A)Less than $20 million
• B)More than $20 million
• C)Equal to $20 million
• D)Unknown without knowing the maturity of the debt

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Definitions:

Abyssal Plains

Deep, flat or gently sloping areas of the ocean floor, situated between the continental margins and mid-ocean ridges, covered by sediment.

Ocean Floor

The bottom surface of the ocean, consisting of various features such as plains, trenches, and ridges.

Seamounts

Underwater mountains formed by volcanic activity, rising from the ocean floor but not reaching the surface.

Smooth

Describes surfaces with an even or flat texture that is free of abrasions or roughness.