A Company Issued 7%, 5-Year Bonds with a Par Value

question 85

Multiple Choice

A company issued 7%, 5-year bonds with a par value of $100,000. The market rate when the bonds were issued was 7.5%. The company received $97,947 cash for the bonds. Using the effective interest method, the amount of interest expense for the first semiannual interest period is:

• A) $3,500.00.
• B) $3,673.01.
• C) $3,705.30.
• D) $7,000.00.
• E) $7,346.03.

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Definitions:

Systolic Reading

The pressure in the arteries when the heart beats and fills them with blood.

Pulmonary Capillaries

Tiny blood vessels located in the lungs where gas exchange of oxygen and carbon dioxide occurs.

Perfusion

The process of delivering blood to a capillary bed in the biological tissue.

Diffusion

The process by which molecules intermingle as a result of their kinetic energy of random motion, leading to a net movement from a region of higher concentration to one of lower concentration.