147.
Match the following terms to the most appropriate answer:
1. if the contract rate is less than the effective rateamortization
2. the allocation of a premium or discount over the life of a bondinterest expense
3. face value times contract rateeffective rate
4. if the contract rate exceeds the effective ratebond premium
5. the return required by the market on the day of issuancecontract rate
6. the value reported on the income statementbond discount
7. the rate printed on the bond certificateinterest payment
148.
Match the following terms to the most appropriate answer:
1. the principal of the bond is paid back in installmentsDebenture
2. a bond issued without any collateral or securityTerm bond
3. the value of a bond stated on the bond certificateFace value
4. the entire principal of the bond is paid back on maturity dateIndenture
5. allows the bond hold to exchange bond for shares of stockCallable bond
6. the legal contract between issuer and bond holderSerial bond
7. allows the issuer to redeem bonds before maturity dateConvertible bond
149. Sorenson Co., is considering the following alternative plans for financing their company:
150. Using the following table, what is the present value of $5,000 to be received 5 years, if the market rate is 7% compounded annually?
1.95238.94340.93458.90909
2.90703.89000.87344.82645
3.86384.83692.81630.75132
4.82270.79209.76290.68301
5.78353.74726.71299.62092
6.74622.70496.66634.56447
7.71068.66506.62275.51316
8.67684.62741.58201.46651
9.64461.59190.54393.42410
10.61391.55840.50835.38554