Compute the Present Value of a Bond: the Principal Amount

question 143

Multiple Choice

Compute the present value of a bond: The principal amount is $140,000,the stated rate is 9%,and the term of the bond is 4 years.The bond pays interest semiannually.At the time of issue,the market rate is 8%.Please compute the present value of the bond at market rate using the present value tables.

• A) $144,758
• B) $42,418
• C) $102,340
• D) $142,000

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Definitions:

Units Sold

The total number of units of a product that have been sold during a particular period.

Period Cost

Costs that are not directly tied to the production process and are expensed in the period they are incurred.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, representing the benefits one could have received by taking a different action.

Variable Cost

Costs that directly correspond with the degree of production or output levels.