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 $300,000,plus present value of $9,000,000 to be repaid in 30 years
B)present value of 30 annual interest payments of $600,000
C)present value of 30 annual interest payments of $600,000,plus present value of $9,000,000 to be repaid in 30years
D)present value of $9,000,000 to be repaid in 30 years,less present value of 60 semiannual interest payments of $300,000

Question

Quizplus · Accepted Answer

The amount received for the bonds is the present value of the future cash flows, which includes the present value of 60 semiannual interest payments of $300,000 and the present value of the $9,000,000 principal to be repaid in 30 years.

A Corporation Issues for Cash $9,000,000 of 8%,30-Year Bonds,interest Payable