Ray Corp. issued bonds with a face amount of $200,000. Each $1,000 bond contained detachable stock warrants for 100 shares of Ray's common stock.
Total proceeds from the issue amounted to $240,000.
The market value of each warrant was $2, and the market value of the bonds without the warrants was $196,000.
The bonds were issued at a discount of

A. $0
B. $678
C. $4,000
D. $33,898

The discount on the bonds is $678

Explanation:

Given:

Face value of bonds                                                      $200000

Each $1000 bond contained detachable stock warrants for 100 shares of Ray's common stock

Total proceeds from the issue                                       $240000

Market value for each warrant                                       $2

market value of the bonds without the warrants         $196000

Therefore market value of warrants = (200 bonds) × (100 warrants/bond)($2) = $40000

total market value of bonds = Market value for warrant + Market value of the bonds without the warrants = $40000 + $196000 = $236000

Allocation amount of bonds = (Total proceeds from the issue ×  Market value of the bonds without the warrants) / total market value of bonds

= $240,000 × $196,000 / $236,000 = $199,322

The discount on the bonds = Face value of bonds - allocation to bonds = $200,000 - $199,322 = $678

The discount on the bonds is $678

d. all of the above are true.

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi