Quiz_14 - Acct-101 Quiz 14 When a corporation issues bonds,...

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Acct-101 Quiz 14 When a corporation issues bonds, the price that buyers are willing to pay for the bonds does not depend on which of the following below face value of the bonds market rate of interest periodic interest to be paid on the bonds denominations the bonds are sold One potential advantage of financing corporations through the use of bonds rather than common stock is the interest on bonds must be paid when due the corporation must pay the bonds at maturity the interest expense is deductible for tax purposes by the corporation a higher earnings per share is guaranteed for existing common shareholders The market interest rate related to a bond is also called the stated interest rate effective interest rate contract interest rate straight-line rate The present value of $40,000 to be received in one year, at 6% compounded annually, is (rounded to nearest dollar) $37,736 $42,400 $40,000 $2,400 A corporation issues for cash $8,000,000 of 8%, 25-year bonds, interest payable semiannually. The amount received for the bonds will be present value of 50 semiannual interest payments of $320,000, plus present value
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This note was uploaded on 03/01/2010 for the course ACCT 2301 taught by Professor White during the Spring '08 term at Central Texas College.

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Quiz_14 - Acct-101 Quiz 14 When a corporation issues bonds,...

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