A Company Issued 7%, 5-Year Bonds with a Par Value

question 85

Multiple Choice

A company issued 7%, 5-year bonds with a par value of $100,000. The market rate when the bonds were issued was 7.5%. The company received $97,947 cash for the bonds. Using the effective interest method, the amount of interest expense for the first semiannual interest period is:

• A) $3,500.00.
• B) $3,673.01.
• C) $3,705.30.
• D) $7,000.00.
• E) $7,346.03.

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Definitions:

Classical Conditioning

A learning process through which associations are formed between a neutral stimulus and an unconditioned stimulus, leading to a learned response.

Low-Balling

A sales tactic where an initially low price is offered to attract a buyer before it is increased by adding costs or changing conditions.

Foot-In-The-Door

A persuasion technique where agreement to a small request increases the likelihood of compliance with a larger request later.

Cognitive Components

The mental processes involved in perception, memory, judgment, and reasoning, which are fundamental to understanding and responding to the environment.