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Could you explain the answer more detailed. Why it leads to higher cash flow from operation and less cash flow from financing? A zero coupon
Could you explain the answer more detailed. Why it leads to higher cash flow from operation and less cash flow from financing?
A zero coupon bond, compared to a bond issued at par, will result in higher: A) interest expense. B) cash flows from operations (CFO). C) cash flows from financing (CFF). The correct answer is B) cash flows from operations (CFO). The zero-coupon bond will have higher cash flows from operations, as the cash interest expense in this case is zero and no cash is paid until maturity. Candidates should remember that any bond issued at a discount will have more cash flow from operations and less cash flow from financingStep by Step Solution
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