What is the right answers and why?? Inc. issues 700 $1,000 face value bonds on J

Question

What is the right answers and why??


Inc. issues 700 $1,000 face value bonds on July 1, 2017 and they considered to be selling at 19. Davison, receive $672,400 in cash from the sale. These bonds are A Discount B. Premium C. Par Value D. Not enough information is provided to determine 20. if a bond is issued at par value, the carrying value of the bond will: A Remain the same over the life of the bond B. Increase over the life of the bond C. Decrease over the life of the bond D. Not enough information 21. Ordinarily, the proceeds from the sale of a bond issue will be equal to A. The face value of the bond B. The total of the face value plus all interest payments C. The face value of the bond plus the present value of the stream of interest payments D The present value of the face value plus the present value of the stream of interest payments 22. Johnson will receive $450,000 from his trust fund in 20 years from today. He assumes he could get a return of 6% on his own until then. How much is his trust fund payment worth in today's dollars? A. $137,952 $140,310 $450,000 $5,161,464

Explanation / Answer

Dear student, only one question is allowed at a time. I am answering the first question

19)

The face value of Bonds issued

= 700 x$1,000

= $700,000

Amount received from sale of bonds

= $672,400

So, bonds have been issued at a discount. The reason for this is that the current market rate of interest is higher than the rate of interest offered by the bonds. So, the cash flows receivable from the bonds will be discounted at higher interest rate which will result in bonds selling at a discount

So, as per above discussion, option A is the correct option

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