Cases Company Issues $802,000 of 8%,10-Year Debentures on 31 March

question 15

Multiple Choice

Cases Company issues $802,000 of 8%,10-year debentures on 31 March 2017.The debentures pay interest on 31 March and 30 September.Which of the following statements is true?

• A)If the market rate of interest is 9%,the debentures will issue at par.
• B)If the market rate of interest is 9%,the debentures will issue at a premium.
• C)If the market rate of interest is 9%,the debentures will issue at a discount.
• D)If the market rate of interest is 9%,the debentures will issue above par.

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Definitions:

Invoice Amount

The total sum of money requested by a vendor from a purchaser for goods delivered or services provided.

Merchandise

Goods that are bought and sold in any business, particularly in retail.

Freight Charge

The cost incurred for transporting goods between places, typically charged by carriers for shipments.

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue; also known as net earnings or net profit.