Final Answer:
the significance of Baddour, Incorporated issuing 10% bonds on March 1, 2024, with a face amount of $160 million, and priced at $143.00 million B) The bonds were issued at a discount.
Step-by-step explanation:
Baddour, Incorporated issuing 10% bonds on March 1, 2024, with a face amount of $160 million, and priced at $143.00 million signifies that the bonds were issued at a discount. The face amount of the bonds is $160 million, but they were priced at $143 million, indicating a discount of $160 million - $143 million = $17 million. This discount is the difference between the face value of the bonds and the amount for which they were issued.
When bonds are issued at a discount, it implies that investors are willing to pay less than the face value to receive the future interest payments and the principal amount at maturity. In this case, the discount of $17 million represents the cost of borrowing for Baddour, Incorporated. The interest rate on the bonds is stated as 10%, but the fact that the bonds were issued at a price lower than the face amount means that the effective interest rate is higher than the stated rate.
Issuing bonds at a discount is a common financial strategy for companies, allowing them to raise capital while offering investors a higher effective yield. It does not necessarily indicate a loss for the issuing company; instead, it reflects the market conditions and investor expectations at the time of issuance.
So the correct option is B) The bonds were issued at a discount.