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    Carrying amount of a bond

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    A company issues $100,000 of semiannual 10-year, 8% bonds sold to yield 10%

    Present value of $1.00 at 5% for 20 periods 0.3769
    Present value of $1.00 at 8% for 10 periods 0.4632
    Present value of ordinary annuity of $1.00 @ 5% for 20 periods 12.462
    Present value of ordinary annuity of $1.00 @ 8% for 10 periods 6.710

    What is the carrying amount of the bonds?

    Select One.

    A. $73,160
    B. $87,538
    C. $98, 452
    D. $104,623

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    Solution Preview

    The carrying amount at the date of issue is the price at which the bonds are sold. The price is the present value of interest and principal discounted at the yield.

    The semi ...

    Solution Summary

    The solution explains how to calculate the carrying amount of a bond