Ocean Adventures issues bonds due in 10 years with a stated interest rate of 6% and a face value of $500,000. Interest payments are made semi-annually. The market rate for this type of bond is 5%. Using a financial calculator or Excel, what is the issue price of the bonds?

Multiple Choice

• $464,469.

• $537,194.

• $500,000.

• $538,973.

• Red Corp. has a rate of return on assets of 10% and a debt to equity ratio of 2 to 1. Not including any indirect effects on earnings, the immediate impact of retiring debt on these ratios is a(n):

  	Return on Assets	Debt to Equity
  a.	increase	increase
  b.	decrease	decrease
  c.	increase	decrease
  d.	decrease	increase

  Multiple Choice

• Option C

• Option B

• Option A

• Option D