If $1,000,000 of 8% bonds are issued at 103 1/2, the amount of cash received from the sale is
A) $1,080,000
B) $965,000
C) $1,000,000
D) $1,035,000

Question

Quizplus · Accepted Answer

To find the amount of cash received from the sale of bonds, we need to consider the premium paid (103 1/2 means 103.5% of par value) and any transaction costs.

Par value of bonds = $1,000,000
Selling price = 103.5% of $1,000,000 = $1,035,000

Therefore, the amount of cash received from the sale is $1,035,000. Choice (D) is the correct answer.

If $1,000,000 of 8% Bonds Are Issued at 103 1/2