If $4,000,000 of 12% bonds are issued at 103 1/4, the amount of cash received from the sale is:

Question

Quizplus · Accepted Answer

To find the amount of cash received from the sale, we need to calculate the total amount of money raised by the bond issue.

The face value of the bonds is $4,000,000, and they are issued at a premium of 3 1/4%, which means they are sold for 103.25% of their face value.

To calculate the total amount of money raised, we can use the following formula:

Total amount raised = Face value of bonds x Issue price

Total amount raised = $4,000,000 x 1.0325

Total amount raised = $4,130,000

Therefore, the amount of cash received from the sale is $4,130,000. The correct answer is C.

If $4,000,000 of 12% Bonds Are Issued at 103 1/4