|Present Value and Bonds #1||Open||
|Present Value of a Single Amount #1||Open|
|Present Value of an Ordinary Annuity #1||Open|
1) The effective interest rate method provides perfect correlation between a bond's interest expense on the corporation's income statement and the bond's ____________ value on the corporation's balance sheet.
2) A bond maturing in three years will be reported as a long-term _____________on the issuing corporation's balance sheet.
3) The difference between each year's bond interest expense and the cash paid for interest is the amount of _________________ of a bond's discount or premium.
4) The amortization of the premium on bonds payable will result in bond interest expense being ________ (less, more) than the cash payment for interest.
5) The __________ interest rate is used to discount a bond's interest payments and the bond's maturity amount to their present values.
6) An advantage for issuing bonds instead of common _______ is that the interest is deductible on the corporation's income tax return.
7) A bond's interest payments form an _____________ annuity.
8) A bond's _________-to-maturity is also the effective interest rate.
9) An increase in the market interest rates will cause the market value of a bond to __________ (decrease, increase).
10) A 20-year bond has a stated interest rate of eight percent per year with the interest paid semiannually. If the market interest rate is ten percent, the present value factor to be used will be based on 'i' equal to _________ percent.
The most unique and effective way to learn accounting – over 1,500 testimonials.