Asked by
Megan Ghelfi
on Nov 13, 2024
Verified
A corporation issues for cash $9,000,000 of 8%, 30-year bonds, interest payable semiannually. The amount received for the bonds will be
A) present value of 60 semiannual interest payments of $360,000, plus present value of $9,000,000 to be repaid in 30 years
B) present value of 30 annual interest payments of $720,000
C) present value of 30 annual interest payments of $360,000, plus present value of $9,000,000 to be repaid in 30 years
D) present value of $9,000,000 to be repaid in 30 years, less present value of 60 semiannual interest payments of $360,000
Present Value
The current worth of a future sum of money or stream of cash flows given a specified rate of return, used in discounting to assess investment value.
Semiannual Interest
Interest that is calculated and paid twice a year, often associated with bonds or loans.
- Understand the fundamentals and mechanisms of bond issuance and pricing within the framework of market interest rates.
Verified Answer
BS
Learning Objectives
- Understand the fundamentals and mechanisms of bond issuance and pricing within the framework of market interest rates.