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Question
A corporation issues for cash $9,000,000 of 8%, 30-year bonds, with interest payable semiannually. The amount received for the bonds will be the
a. present value of 60 semiannual interest payments of $360,000, plus the present value of $9,000,000 to be repaid in 30 years, computed at the market rate of interest
b. present value of 30 annual interest payments of $720,000, computed at the contract rate of interest
c. present value of 30 annual interest payments of $360,000, plus the present value of $9,000,000 to be repaid in 30 years, computed at the market rate of interest
d. present value of $9,000,000 to be repaid in 30 years, less the present value of 60 semiannual interest payments of $360,000, computed at the contract rate of interest
Answer
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