41．A firm issues a $5 million zero coupon bond with a maturity of four years when market rates are 8 percent, assume annual compounding.

Proceeds from this issue are:

A)   $3,653,451.

B)   $4,629,630.

C)   $3,675,149.

D)   $5,000,000.

42．Nomad Company issued $1,000,000 face value 2-year zero coupon bonds on December 31, 20X2 to yield 8% interest. Bond proceeds were $857,339. In 20X3 Nomad recorded interest expense of $68,587. In 20X4 Nomad recorded interest expense of $74,074 and paid out $1,000,000 to redeem the bonds.

Based on these transactions only, Nomad’s Statement of Cash Flows would show cash flow from operations (CFO) of:

A)   -$68,587 in 20X3 and -$74,074 in 20X4.

B)   zero in all years.

C)   -$142,661 in 20X4.

D)   -$1,000,000 in 20X4.

答案和详解如下：

41．A firm issues a $5 million zero coupon bond with a maturity of four years when market rates are 8 percent, assume annual compounding.

Proceeds from this issue are:

A)   $3,653,451.

B)   $4,629,630.

C)   $3,675,149.

D)   $5,000,000.

The correct answer was C)

FV = $5,000,000; i = 8%; n=4; PMT=0; compute PV=-$3,675,149 and drop the negative sign.

42．Nomad Company issued $1,000,000 face value 2-year zero coupon bonds on December 31, 20X2 to yield 8% interest. Bond proceeds were $857,339. In 20X3 Nomad recorded interest expense of $68,587. In 20X4 Nomad recorded interest expense of $74,074 and paid out $1,000,000 to redeem the bonds.

Based on these transactions only, Nomad’s Statement of Cash Flows would show cash flow from operations (CFO) of:

A)   -$68,587 in 20X3 and -$74,074 in 20X4.

B)   zero in all years.

C)   -$142,661 in 20X4.

D)   -$1,000,000 in 20X4.

The correct answer was B)

All of the cash flows for zero coupon bonds are included in cash flow from financing activities and none in cash flow from operations.