The Face Value Is $82,000, the Stated Rate Is 10

question 92

Multiple Choice

The face value is $82,000, the stated rate is 10%, and the term of the bond is eight years. The bond pays interest semiannually. At the time of issue, the market rate is 8%. What is the present value of the bond at the issue date? Present value of $1:
$$\begin{array} { | l | l | l | l | l | l | } \hline & 4 \% & 5 \% & 6 \% & 7 \% & 8 \% \\\hline 15 & 0.555 & 0.481 & 0.417 & 0.362 & 0.315 \\\hline 16 & 0.534 & 0.458 & 0.394 & 0.339 & 0.292 \\\hline 17 & 0.513 & 0.436 & 0.371 & 0.317 & 0.270 \\\hline 18 & 0.494 & 0.416 & 0.350 & 0.296 & 0.250 \\\hline 19 & 0.475 & 0.396 & 0.331 & 0.277 & 0.232 \\\hline\end{array}$$ Present value of ordinary annuity of $1:
$$\begin{array} { | r | c | c | c | c | c | } \hline & 4 \% & 5 \% & 6 \% & { 7 \% } & 8 \% \\\hline 15 & 11.118 & 10.380 & 9.712 & 9.108 & 8.559 \\\hline 16 & 11.652 & 10.838 & 10.106 & 9.447 & 8.851 \\\hline 17 & 12.166 & 11.274 & 10.477 & 9.763 & 9.122 \\\hline 18 & 12.659 & 11.690 & 10.828 & 10.059 & 9.372 \\\hline 19 & 13.134 & 12.085 & 11.158 & 10.336 & 9.604 \\\hline\end{array}$$

• A) $91,561
• B) $47,773
• C) $43,673
• D) $84,788

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Definitions:

Market Demand Curve

A graphical representation of the quantity demanded at various prices by all consumers in the market.

Individual Corn Producer's Demand Curve

A graphical representation showing the quantity of corn that an individual producer is willing and able to sell at various prices, typically downward sloping.

Perfectly Price Elastic

A situation where a small change in price leads to an infinite change in the quantity demanded or supplied.

Daily Revenues

The total amount of income generated by a business or operation within a single day.