What is the book value of the bonds as of December 31,2017?
A)$8,834,770.
B)$8,686,606.
C)$8,734,070.
D)$8,783,433.

Question

Quizplus · Accepted Answer

The book value of the bonds is the present value of the future cash flows, discounted at the effective interest rate. The future cash flows are the semi-annual interest payments of $220,000 and the principal payment of $10,000,000 at maturity. The effective interest rate is 4%. The book value of the bonds as of December 31, 2017 is $8,834,770.

What Is the Book Value of the Bonds as of December