A Company Issues at 9% Bonds at Par with a Par

question 108

Multiple Choice

A company issues at 9% bonds at par with a par value of $100,000 on April 1,which is 4 months after the most recent interest date.How much total cash interest is received on April 1 by the bond issuer?

• A)$750
• B)$5,250
• C)$1,500
• D)$3,000
• E)$6,000

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Definitions:

Budgetary Slack

The intentional underestimation of revenues and/or overestimation of expenses in a budget to create the appearance of having less money available than might actually be available.

Padding

The practice of inflating estimates or financial figures to create a buffer for unexpected costs or to create the appearance of greater value.

Static Budget

A fixed budget that does not change or adjust to variations in business activity levels, often used for control purposes in stable environment operations.

Flexible Budget

A budget that adjusts or flexes with changes in the volume or activity level.