A company paid $37,800 plus a broker's fee of $525 to acquire 8% bonds with a $40,000 maturity value.The company intends to hold the bonds to maturity.The cash proceeds the company will receive when the bonds mature equal:
A)$37,800.
B)$38,325.
C)$40,000.
D)$40,525.
E)$43,200.

Question

Quizplus · Accepted Answer

The company paid $37,800 plus a broker's fee of $525, which totals to $38,325 initially for the 8% bonds with a $40,000 maturity value. However, since the company intends to hold the bonds to maturity, the only cash proceeds they will receive when the bonds mature is the $40,000 maturity value. Therefore, the answer is C.

A Company Paid $37,800 Plus a Broker's Fee of $525