11/25/2020 5.9 End-of-Chapter Exercises - Principles of Financial 5. Kitten Inc. issued $105,000 in bonds on September 1. The annual interest rate is 6 percent and interest is paid on the bonds every June 30 and December 31. When the bonds are issued on September 1, how much cash will the company collect? 1. $105,000 2. $1,050 3. $106,050 4. $103,950 6. Which of the following is an agreement which debtors sign as part of getting a loan that serves to protect a creditor? 1. Security 2. Term bond Failab 3. Leverage 4. Covenant 7. Which of the following is not a reason companies borrow money? 1. To raise needed funds 2. Interest is tax deductible 3. Creditors have control over the company 4. Creditors do not become owners in the company 8. Which of the following refers to an asset a creditor could take from a debtor if the debtor fails to pay back a loan? 1. Interest 2. Security 3. Covenant 4. Maturity 9. Krystal Corporation issued $100,000 with a 4 percent stated rate of interest on January 1. The effective rate of interest on that date was 6 percent and interest is paid semiannually on June 30 and December 31. The bonds mature ten years from now. What amount would bondholders be willing to pay Krystal on January 1 for the bonds? 1. $100,000 C 2. $85.123 Previous: 5.8 Accounting for Leases and Installment Notes