Home / Questions / When calculating the value of a bond using present value techniques, which of the followin
When calculating the value of a bond using present value techniques, which of the following is not relevant?
|
a. |
The dollar amount of the discount or premium |
|
b. |
The present value of a single sum table |
|
c. |
The amount of the periodic interest payment |
|
d. |
The face amount of the bonds |
138.On January 2, 20x7, Barham Corporation issued ten-year bonds payable with a face value of $400,000 and a face interest rate of 9 percent. The bonds were issued to yield a market interest rate of 10 percent. Interest is payable semiannually on January 2 and July 1. In calculating the present value of the bond issue on January 2, 20x7,
|
a. |
the 10 percent rate will be used to calculate the present value of the face amount and the present value of the periodic interest payments. |
|
b. |
a 5 percent rate will be used to calculate the present value of the face amount and the present value of the periodic interest payments. |
|
c. |
the 9 percent rate will be used to calculate the present value of the face amount and the present value of the periodic interest payments. |
|
d. |
the 10 percent rate will be used to calculate the present value of the face amount and a 5 percent rate will be used to calculate the present value of the periodic interest payments. |
139.On January 2, 20x7, McGowan Corporation issued 20-year bonds payable with a face value of $300,000 and a face interest rate of 8 percent. The bonds were issued to yield a market interest rate of 9 percent. Interest is payable annually on January 2. In calculating the present value of the bond issue of January 2, 20x7, the
|
a. |
9 percent rate will be used to calculate the present value of the face amount and the 8 percent rate will be used to calculate the present value of the periodic interest payments. |
|
b. |
8 percent rate will be used to calculate the present value of the face amount and the 9 percent rate will be used to calculate the present value of the periodic interest payments. |
|
c. |
8 percent rate will be used to calculate the present value of the face amount and the present value of the periodic interest payments. |
|
d. |
9 percent rate will be used to calculate the present value of the face amount and the present value of the periodic interest payments. |
140.Which of the following is not needed in calculating the value of a bond?
|
a. |
Future value of periodic interest payments |
|
b. |
Market interest rate |
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c. |
Present value of face (maturity) amount |
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d. |
Face interest rate |
141.A bond premium has the effect of
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a. |
lowering the carrying value of the bond. |
|
b. |
raising the effective interest rate above the face interest rate. |
|
c. |
increasing the amount of cash paid for interest each six months. |
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d. |
lowering the effective interest rate below the face interest rate. |
142.The total interest cost on forty-one ten-year, 6 percent, $1,000 bonds that are issued at 98 is
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a. |
$23,780. |
|
b. |
$25,010. |
|
c. |
$25,420. |
|
d. |
$24,600. |
143.When bonds are issued at a premium, the total interest cost of the bonds over the life of the bonds is equal to the amount of
|
a. |
interest payments made over the life of the bonds. |
|
b. |
issuance premium. |
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c. |
interest payments made over the life of the bonds plus the amount of issuance premium. |
|
d. |
interest payments made over the life of the bonds minus the amount of issuance premium. |
144.Suffolk Corporation issued $90,000 of 20-year, 6 percent bonds at 98 on one of its semiannual interest payment dates. The straight-line method of amortization is to be used. How much bond interest expense will be recorded on the next interest payment date?
|
a. |
$5,400 |
|
b. |
$2,700 |
|
c. |
$2,745 |
|
d. |
$5,445 |
145.Suffolk Corporation issued $100,000 of 20-year, 6 percent bonds at 98 on one of its semiannual interest payment dates. The straight-line method of amortization is to be used. After seven years, what is the carrying value of the bonds?
|
a. |
$98,700 |
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b. |
$99,650 |
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c. |
$98,350 |
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d. |
$99,300 |
146.Suffolk Corporation issued $100,000 of 20-year, 6 percent bonds at 98 on one of its semiannual interest payment dates. The straight-line method of amortization is to be used. What is the total interest cost of the bonds?
|
a. |
$117,500 |
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b. |
$120,000 |
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c. |
$118,000 |
|
d. |
$122,000 |
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