Use the Information Provided in the Time Value of Money

question 99

Multiple Choice

Use the information provided in the time value of money tables (Tables 9-1 through 9-4) in the text to answer the question that follows. Cosmic Company issued $1,000,000,8%,7 year bonds,interest payable semiannually.The market rate of interest was 6%.The issuance price of the bonds is

• A)$1,111,560
• B)$1,000,000
• C)$1,151,480
• D)$1,112,840

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Definitions:

Market Price

The current price at which an asset or service can be bought or sold in a marketplace.

Return on Total Assets

A financial ratio that measures the profitability of a company in relation to its total assets, indicating how efficient management is at using its assets to generate earnings.

Interest Expense

A financial charge for borrowing money or the cost incurred on debt.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenue.