1) Annuities are:

Select one:

a. Periodic and recurring fixed payments

b. Periodic and recurring payments that are variable based on fluctuations in market interest rate

c. Principal repayments

d. Periodic and recurring payments that systematically decrease throughout the life of the bonds

2) Determining the price of a bond requires calculating:

Select one:

a. Present value of the bond’s principal and interest payments

b. Market interest rate

c. Future value of the bond’s principal and interest payments

d. None of the available choices

3) On July 31, 2018, Snowday Corporation issued $100,000, 5%, 20-year bonds for $88,443 when the market interest rate was 6%. The bonds pay semi-annual interest on July 31 and January 31. Snowday uses the straight-line method to amortize its bond discount or premium, and it has a January 31 year-end. How much would interest expense from these bonds be recorded in Snowday’s financial statements for the year ended January 31, 2019?

Select one:

a. $2,788.93

b. $2,500

c. $5,577.85

d. $5,000

Answer rating: 100% (QA)

Solution 01 Answer a Periodic and recurring fixed payments And b Periodic and recurring payments tha... View the full answer