MC Qu. 59 LO 14-02, 14-04 Auerbach Inc. issued... Auerbach Inc. issued 8% bonds
ID: 2500863 • Letter: M
Question
MC Qu. 59 LO 14-02, 14-04 Auerbach Inc. issued...
Auerbach Inc. issued 8% bonds on October 1, 2013. The bonds have a maturity date of September 30, 2023 and a face value of $600 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2014. The effective interest rate established by the market was 10%.
Assuming that Auerbach issued the bonds for $525,222,000, what would the company report for its net bond liability balance at December 31, 2013, rounded to the nearest thousand? (Do not round your intermediate calculation.)
$513,222,000
$526,353,000
$599,000,000
$537,222,000
Auerbach Inc. issued 8% bonds on October 1, 2013. The bonds have a maturity date of September 30, 2023 and a face value of $600 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2014. The effective interest rate established by the market was 10%.
Assuming that Auerbach issued the bonds for $525,222,000, what would the company report for its net bond liability balance at December 31, 2013, rounded to the nearest thousand? (Do not round your intermediate calculation.)
Explanation / Answer
Bonds are issued at =$525,222,000
Add Interest @8% for 3 month (600,000,000*8%*3/12) =$12,000,000
Net bond Liability at Dec 31, 2013 =$537,222,000
Option D is correct answer
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