A Corporation Undertaking an Expansion Project Issues 20 Year Bonds

Multiple Choice

A corporation undertaking an expansion project issues 20 year bonds to finance the project. Which of the following is most likely true?

A) The company does not need to make payments on the bonds unless it has positive earnings for the year.
B) The company has borrowed money and must pay interest on the amount borrowed.
C) The company did not have any outstanding bonds when it issued the new bonds.
D) The bonds must have sold at a premium since expansion projects are generally risky.
E) If the company could have issued preferred stock instead, they would have.