Blanding Company Issues $1,000,000 of 8%,10-Year Bonds at 98 on February

question 34

Multiple Choice

Blanding Company issues $1,000,000 of 8%,10-year bonds at 98 on February 28,2012.The bond pays interest on February 28 and August 31.The market rate of interest on the issuance date was 10%.On August 31,2012,how much cash did Blanding pay out to bondholders?

• A) $41,000
• B) $40,000
• C) $80,000
• D) $39,000

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Definitions:

Total Utility

The total satisfaction received from consuming a certain quantity of goods or services.

Marginal Utility

is the additional satisfaction or utility that a consumer receives from consuming one more unit of a good or service.

Total Utility

The total satisfaction or benefit received by consuming a given total quantity of a good or service.

Market Equilibrium

A market state where the supply of goods matches demand, with no incentive for price to change.