Deltona Motors Just Issued 225,000 Zero Coupon Bonds

question 25

Multiple Choice

Deltona Motors just issued 225,000 zero coupon bonds.These bonds mature in 20 years,have a par value of $1,000,and have a yield to maturity of 7.45 percent.What is the approximate total amount of money the company raised from issuing these bonds? (Assume semiannual compounding.)

• A)$48.20 million
• B)$52.10 million
• C)$55.14 million
• D)$162.08 million
• E)$225.00 million

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Definitions:

Prepaid Revenue

Income received by a company for goods or services to be delivered or performed in the future, recorded as a liability on the balance sheet until earned.

Depreciation Expense

The allocated amount of the cost of a tangible or physical asset over its useful life, reflecting the decrease in the asset’s value due to use and/or age.

Correction Of An Error

Adjustments made in financial statements to amend mistakes or omissions in previously issued financial reports.