Douglas Whipple Corporation needs $200 million to expand its production and to develop new products.Is has agreed to issue written pledges that it will repay a specified amount of money with interest on a particular day.Because it is uncertain it will have sufficient funds available if all of the pledges should become due on the same day,none of the pledges will be paid during the first 15 years.After 15 years,10 percent of the pledges will mature each year until all of them are retired at the end of the 25th year.What are the pledges?

Question

Quizplus · Accepted Answer

The type of pledge described in the scenario is a serial bond, which matures in installments over a period of time. Registered bonds and bond indentures are types of bonds, but they do not have the same maturity structure described in the scenario. Term-loan agreements are a type of loan, which is different from a bond.

Douglas Whipple Corporation Needs $200 Million to Expand Its Production