A Company Issued 5-Year,7% Bonds with a Par Value of $100,000.The

question 57

Multiple Choice

A company issued 5-year,7% bonds with a par value of $100,000.The market rate when the bonds were issued was 6.5%.The company received $102,105 cash for the bonds.Using the effective interest method,the amount of recorded interest expense for the first semiannual interest period is:

• A)$3,500.00.
• B)$7,000.00.
• C)$3,318.41.
• D)$6,573.90.
• E)$1,750.00.

---

Definitions:

Marginal Revenue Product

The extra revenue generated by employing an additional unit of a factor, such as labor or capital.

Perfect Competitor

A theoretical market structure where numerous small firms sell identical products, and no single seller can influence the market price.

Monopolist

A monopolist is a sole provider of a good or service in a market, having the power to influence the price and quantity of the product.

Output Price

The price at which a product or service is sold in the market.