Compute the Present Value of a Bond: the Principal Amount

question 8

Multiple Choice

Compute the present value of a bond: The principal amount is $50,000,the stated rate is 3%,and the term of the bond is 6 years.The bond pays interest semiannually.At the time of issue,the market rate is 4%.Please compute the present value of the bond at market rate using the present value tables.

• A) $39,400
• B) $7,931
• C) $47,331
• D) $59,000

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Definitions:

Fixed Overhead Volume

The quantity of fixed overhead costs that do not change with the level of production or activity.

Standard Cost

An estimated or predetermined cost of performing an operation or producing a good, used in budgeting and pricing decisions.

Raw Material

Basic materials used in the production process as inputs to create finished goods.

Work in Process

Items that are in the middle stages of production, neither raw materials nor finished goods, reflecting the cost of ongoing manufacturing activities.