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 present value of:

A) $10,000 in 5 years plus the present value of $700 a year for 5 years.
B) $700 paid once a year for 5 years.
C) $10,000 to be paid in 5 years.
D) $10,000 in 5 years minus the present value of $700 a year for 5 years.