Target Company Issues Bonds with a Par Value of $900,000

question 185

Short Answer

Target Company issues bonds with a par value of $900,000 on their stated issue date.The bonds mature in 10 years and pay 10% annual interest in semiannual payments.On the issue date,the annual market rate for the bonds is 12%.What is the selling price of the bond?

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Definitions:

Relevant Range

The span of activity level within which the assumptions about variable and fixed cost behaviors hold true.

High-low Method

A technique used in managerial accounting to estimate fixed and variable costs by analyzing the highest and lowest levels of activity and the associated costs.

Variable Cost

A cost that varies directly with the level of production or volume, such as materials and labor directly involved in the production process.

Least-squares Method

A statistical technique used to determine the line of best fit by minimizing the sum of the squares of the differences between observed and estimated values.