Question

Neumann Corporation is planning to issues bonds with a face amount of $2 million. If Neumann's accountant, Betty, wants to calculate the expected issue she should calculate the ____ of the related future cash payments using the ____ interest rate.

Answer 1

The correct answer is Present value, market.

Step-by-step explanation:

Present value is today's value of a given amount of resources over a time horizon. Then, to determine the impact by the referenced quantity, it is necessary for the accountant to determine that measure taking into account the time established by Neumann, also using the interests of the present to take as a reference a calculation measure of this indicator. The behavior will surely make these interests vary over a time horizon, which is why it is necessary to adjust it at the precise moment that the sale of the bonds is carried out.