a disadvantage of bond financing is:

a$.$ It allows firms to trade on the equity.

b$.$ Bonds can increase return on equity.

c$.$ Bonds do not affect owners' control.

d$.$ Interest on bonds is tax deductible.

e$.$ Bonds pay periodic interest and the repayment of par value at maturity

TRUE OR FALSE An installment note is an obligation of the issuing company that requires a series of

periodic payments to the lender.

The carrying value of bonds at maturity always equals:

a$.$ the par value of the bond.

b$.$ the amount of discount or premium.

c$.$ $$0.$

d$.$ the amount of cash originally received in exchange for the bonds.

e$.$ the amount of cash originally received in exchange for the bonds plus any unamortized discount or less

any premium.

TRUE OR EALSE A company borrows $$10,000$ and issues a $5-$year, $6\%$ installment note with interest

payable annually. The factor for the present value of an annuity at $6\%$ for $5$ years is $4\mathrm{.}2124.$ The factor for

the present value of a single sum at $6\%$ for $5$ years is $0\mathrm{.}7473.$ The amount of the annual payment is

$$2,373\mathrm{.}94$

TRUE OR EALSE A company borrows $$40,000$ and issues a $3-$ year, $10\%$ installment note with interest

payable annually. The factor for the present value of an annuity at $10\%$ for $3$ years is $2\mathrm{.}4869.$ The factor for

the present value of a single sum at $10\%$ for $3$ years is $0\mathrm{.}7513.$ The amount of the annual payment is

$$12,000.$

TRUE OR EALSE A bondholder that owns a $$1,000,10\%,10-$year bond has:

TRUE OR FALSE interest on bonds is tax deductible?

TRUE OR FALSE An annuity is a series of equal payments at regular time intervals

TRUE OR FALSE the present value of an annuity is equal to sum of the individual future value for each

payment

TRUE OR FALSE The carrying $($book$)$ value of a bond at the time it is issued is always equal to its par

value.

TRUE OR FALSE payments on an installment note normally include the accrued interest expense plus

apportion of the amount borrowed

TRUE OR FALSE A bond's par value is not necessarily the same as its market value