If $1,000,000 of 8% Bonds Are Issued at 105, the Amount

question 1

Multiple Choice

If $1,000,000 of 8% bonds are issued at 105, the amount of cash received from the sale is

• A) $1,080,000
• B) $950,000
• C) $1,000,000
• D) $1,050,000

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Definitions:

N Th

Referring to an unspecified member of a series or set.

Increasing Annuity

An annuity payment plan where the payment amounts increase over time.

Compounded Monthly

A method of interest calculation where the interest earned is added to the principal sum each month, causing the interest to grow exponentially over time.

Principal

The initial amount of money deposited or loaned, before interest is added or charged.