Question

Metlock, Inc. issues $253,000, 10-year, 9% bonds at 98. What is the initial cash received by the company from the bond issuance?

a. $248,940
b. $253,000
c. $261,800
d. $493,760

Answer 1

The initial cash received by Metlock, Inc. from the bond issuance is $248,940, calculated by multiplying the face value of $253,000 by 98%. which corresponds to option (a).$248,940.

Step-by-step explanation:

The student has asked about the initial cash received by Metlock, Inc. from the issuance of $253,000, 10-year, 9% bonds at 98. To calculate the initial cash received, you multiply the face value of the bonds by the percentage at which they're issued (98% in this case).

So, the calculation would be:
$253,000 (face value) × 0.98 (issued at 98%) = $248,940.

Therefore, the initial cash received by the company from the bond issuance is $248,940, which corresponds to option (a).