Under the Effective-Interest Method of Amortization, the Cash Payment on Each

question 13

Multiple Choice

Under the effective-interest method of amortization, the cash payment on each interest payment is calculated by multiplying the:

• A)carrying value of the bonds times the stated interest rate for the appropriate time period.
• B)carrying value of the bonds times the effective-interest rate for the appropriate time period.
• C)face value of the bonds times the stated interest rate for the appropriate time period.
• D)face value of the bonds times the effective-interest rate for the appropriate time period.

---

Definitions:

Supply Curves

Graphical representations showing the relationship between the price of a good and the quantity of that good that suppliers are willing to provide.

Tax Revenue

The earnings obtained by governments from tax collection.

Consumer Surplus

The contrast between what consumers intend to pay for an item or service and the real cost they bear.

Producer Surplus

The gap between the price producers are prepared to take for a product and the price they end up getting.