A 5 Percent Debenture (Face Value = $1,000) Pays Interest

Multiple Choice

A 5 percent debenture (face value = $1,000) pays interest on June 30 and December 31.It is callable at a price of 105 percent together with accrued interest.Suppose the company decides to call the bonds on September 30.What amount must it pay for each bond?

A) $1,000
B) $1,037.50
C) $1,062.50
D) $1,050