Your Company Issues a 5-Year Bond with a Face Value

Multiple Choice

Your company issues a 5-year bond with a face value of $10,000 and a stated interest rate of 7%.The market interest rate is 5%.The issue price of the bond is calculated as the:

A) present value of $10,000 to be received in 5 years plus the present value of $700 per year for 5 years.
B) face value of the bonds,$10,000.
C) amount investors would have to pay to earn 7% interest.
D) amount investors would have to pay to earn an average of the stated interest rate and the market interest rate.