Three Years Ago,Michelle Bought a Custom-Made Bookcase to Fit in the Corner

question 10

Multiple Choice

Three years ago,Michelle bought a custom-made bookcase to fit in the corner of her apartment.She paid $1,000 for it.To replace it today would cost $1,500;however,if she had to sell it,she believes she could get only $700.The appropriate balance sheet amount for the bookcase is

• A)$1,000.
• B)$1,500.
• C)$ 700.
• D)$1,200.

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Definitions:

8 ½% Bond

A bond that pays an annual interest rate of 8.5%, where the interest payment is made to bondholders as compensation for their investment.

Current Yield

The annual income (interest or dividends) divided by the current price of the security, expressed as a percentage.

8% Bond

A bond that pays an annual interest rate of 8% on its face value, typically issued by corporations or governments as a form of debt financing.

Yield To Maturity

The total return anticipated on a bond if the bond is held until it matures, taking into account its current market price, par value, coupon interest rate, and time to maturity.