g suppose you deposited $1,000 five years ago and another $1,000 three years ago in your savings account. if your current account balance shows $2,529.24, what is the rate of return on your deposit?

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Answer 1

The rate of return on your deposit is 6.5%.

Step 1: Calculate the individual future values of both deposits.
- Deposit 1: $1,000 deposited 5 years ago
- Deposit 2: $1,000 deposited 3 years ago

Step 2: Use the formula for future value (FV) of a single sum:
FV = PV(1+r)ⁿ
Where PV is the present value, r is the rate of return, and n is the number of years.

Step 3: Solve for r in both deposits.
- Deposit 1: $1,000(1+r)⁵ = $1,268.24
- Deposit 2: $1,000(1+r)³ = $1,261

Step 4: As both deposits have the same rate of return, solve for r using one of the equations:
$1,000(1+r)³ = $1,261

Step 5: Divide both sides by $1,000 and take the cube root of the result:
(1+r) = 1.08027

Step 6: Subtract 1 from the result to find the rate of return:
r = 0.08027, or 8.027%

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Related Questions

risks can be avoided by countering the threats facing an asset or by eliminating the exposure of an asset. question 1 options: true false

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The statement "risks can be avoided by countering the threats facing an asset or by eliminating the exposure of an asset" is true.

How can risks be avoided?

Risks can be avoided by implementing proper security measures. It can be done by countering the threats that the asset is facing or by eliminating the asset's exposure. The countermeasures employed by organizations aim to prevent or minimize the risks associated with their assets.

Some of the common countermeasures include:

Providing access control to protect against unauthorized accessConducting regular security assessments and audits of the organization and its Assets Use of firewalls, IDSs, and antivirus software to prevent cyber-attacksImplementing physical security measures such as video surveillance, access control, and burglar alarmsRegular training of employees to ensure that they understand the importance of security measuresMaintaining a backup and disaster recovery plan to help mitigate the consequences of a security breach.

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True/False: the primary function of financial accounting is to provide relevant financial information to parties external to business enterprises.

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The given statement is true because the primary function of financial accounting is to provide relevant financial information to parties external to business enterprises.

Financial accounting is the process of compiling financial statements that are intended to be used by decision-makers outside the organization, such as investors, regulators, and the general public. The primary goal of financial accounting is to provide information that is useful to these external users in making informed decisions about the organization's performance, liquidity, and potential for success.

Financial accounting is concerned with providing information to parties outside the company who have a vested interest in its financial health, such as shareholders, lenders, creditors, and regulators. It is critical for businesses to provide reliable, relevant, and timely financial information to these stakeholders because it can have a significant impact on their decisions.

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As the marketing director for a mid-range chain hotel in rural Indiana that boasts several locations worldwide, you have been informed that your hotel is losing business to some of its nearby competitors. What would you do or implement to try and rectify the situation? Identify and evaluate several marketing channels that you could use to promote your hotel's destinations and products

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As the marketing director, I would recommend implementing a multi-pronged marketing strategy that leverages various channels to promote the hotel's destinations and products.

Here are a few potential marketing channels that could be used:

Social Media Advertising: Target specific demographics with ads to showcase hotel amenities, highlight promotions/events, and provide information about local attractions.Content Marketing: Create engaging content (blog posts, videos, infographics) to attract potential customers, showcase local attractions, and provide insights into the hotel's unique offerings.Influencer Marketing: Partner with influencers to reach new audiences, promote special promotions/events, showcase hotel amenities, and provide travel recommendations.Email Marketing: Cost-effective way to stay in touch with customers by sending newsletters and promotional emails about special offers and events.Search Engine Optimization (SEO): Optimize website for search engines by using relevant keywords and optimizing content to improve visibility and attract organic traffic.

What is SEO?

SEO stands for Search Engine Optimization. It refers to the process of optimizing a website's content and structure to improve its visibility and ranking in search engine results pages (SERPs). The goal of SEO is to attract more organic traffic to a website by making it more relevant and valuable to search engine users.

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the temporary account used only for the closing process that contains a credit for total revenues (and gains) and a debit for total expenses (and losses) is the:

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The temporary account used only for the closing process that contains a credit for total revenues (and gains) and a debit for total expenses (and losses) is the income summary account.

What is a temporary account?

A temporary account is an account that contains entries made for only one accounting period. This means that the account's balances are reset at the end of the period.

As a result, these accounts are closed at the end of the accounting period when their balances are transferred to permanent accounts.

Temporary accounts include revenues, expenses, and dividends. Since they are used to record a company's activities for a specified period, they are typically adjusted and closed at the end of the period.

Permanent accounts, such as assets, liabilities, and equity accounts, are not closed at the end of an accounting period but instead carry over to the next period.

What is the income summary account?

The income summary account is a temporary account used during the closing process to collect all of the revenue and expense balances and transfer them to the retained earnings account.

It aids in the preparation of financial statements by summarizing the revenue and expense accounts' balances for the period in one account. It helps to close temporary accounts by aggregating their balances at the end of the period.

The income summary account has a credit balance that equals the total revenue and gains and a debit balance that equals the total expenses and losses at the end of the accounting period.

When the balance in the income summary account is transferred to retained earnings, it is closed for the period.

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Answer: income summary account

Explanation:

a plan showing the units of goods expected to be sold and the expected revenue from sales is called the

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A plan showing the units of goods expected to be sold and the expected revenue from sales is called the sales budget.

A sales budget is a financial document that predicts how much money a company will make during a particular period from the sale of its goods or services. A sales budget forecasts sales revenues for the budget period, which is generally one year, and lays the groundwork for the company's budget plan.

A sales budget is a financial document that outlines the expected revenues that a firm will receive from its primary business operations during a specified period. The sales budget is divided into various subcategories, including revenue by market or product, cost of goods sold, and gross profit margin. A sales budget is an essential component of an overall budget plan. Sales budget is used to calculate the estimated income that a business is likely to earn over a particular time period. The sales budget is an essential part of the budget plan because it helps to guide decision-making about how to allocate resources and manage the company's finances effectively.

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the average collection period is 90 days. what is the amount of accounts receivable if sales are $400,000?

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The amount of accounts receivable if sales are $400,000 when the average collection period is 90 days is $1,095,890.

In order to calculate the amount of accounts receivable, we can use the formula:

Accounts Receivable = (Average Daily Sales) x (Average Collection Period)  

Where, Average Daily Sales = (Total Sales for the Period) / (Number of Days in the Period)

Given, Total Sales for the Period = $400,000Number of Days in the Period = 365 days

So, the Average Daily Sales would be:

Average Daily Sales = $400,000 / 365 days

Average Daily Sales = $1,095.89

We are also given that the Average Collection Period is 90 days.

So, we can now use these values to calculate the amount of accounts receivable.

Accounts Receivable = (Average Daily Sales) x (Average Collection Period)

Accounts Receivable = $1,095.89 x 90 days

Accounts Receivable = $98,634.81

Therefore, the amount of accounts receivable if sales are $400,000 when the average collection period is 90 days is $1,095,890.

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if you worked in a matrix organization, what would be the career development challenge that you might face? if you have not worked in a matrix organization, does the idea of working in a matrix structure appeal to you?

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The career development challenge in a matrix organization is the potential lack of clear career paths and advancement opportunities.

In a matrix organization, employees may have multiple managers or project leaders, and their work may span across different departments or functions, which can make it challenging to define a clear career path or progression.

Additionally, since employees may be working on multiple projects or initiatives at once, they may not have as much time or resources to dedicate to their own professional development. However, the matrix structure can also offer opportunities for cross-functional learning and exposure to different areas of the organization, which may be appealing to some individuals.

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products that are unknown to the potential buyer or a known product the buyer does not actively seek are called .

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The products that are unknown to the potential buyer or a known product the buyer does not actively seek are called "unsought products".

Unsought products are consumer products that are not yet known or known to the customer but not looked for. These products include luxury products such as expensive perfumes, high-end watches, etc. Additionally, unsought goods may include products that may be unknown to customers or may be avoided, such as certain products for medical conditions. Potential buyers of unsought products may require special marketing methods.

If the item is a new product, the marketing plan may need to educate customers about the product's uses and benefits. If the item is a product that some people do not know about, such as life insurance or an advanced medical procedure, the marketing strategy may be to encourage people to use or purchase the product as a way to improve their lives.

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the methods by which a government adjusts its spending levels and tax rates to influence a nation's economy are known as:

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The methods by which a government adjusts its spending levels and tax rates to influence a nation's economy are known as fiscal policies.

Fiscal policies involve the government changing spending levels, tax rates, and other forms of taxation to influence economic growth. For example, increasing spending and cutting taxes can stimulate economic activity and lead to economic growth. Alternatively, reducing spending and raising taxes can help to reduce inflation and reduce government debt.


It refers to the government's decisions on taxes, spending, and debt management in order to promote economic stability and growth. Fiscal policy involves the use of government spending and tax policies to affect the overall economy by influencing aggregate demand and aggregate supply. It is often used in conjunction with monetary policy, which is controlled by a central bank like the Federal Reserve in the United States.

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becky is running for election on a political platform that includes a high level of debt finance and low taxes. this can best be described as

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The election on a political platform that includes a high level of debt finance and low taxes could be best defined as fiscal conservatism emphasizes fiscal responsibility and limits government spending and taxation.

Becky's political platform includes a high level of debt finance and low taxes, which is a common fiscal policy known as fiscal conservatism or fiscal hawkishness.

Fiscal conservatism is focused on keeping government spending low, balancing the budget, and reducing public debt. Low taxes are also a key component of fiscal conservatism, as taxes can reduce economic growth.

Ultimately, fiscal conservatism emphasizes fiscal responsibility and limits government spending and taxation.

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your aunt has promised to give you $5,000 when you graduate from college. you expect to graduate three years from now. if you can work your schedule to graduate a year earlier, the present value of the promised gift will:

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The present value of the promised gift will be higher if you graduate a year earlier.

Assuming a discount rate remains constant, the present value of the promised gift will increase if you graduate a year earlier because the time period for discounting the future value of money will decrease.

To calculate the present value of the gift in both scenarios, we can use the formula:

PV = FV / (1 + r)ⁿ

Where PV is the present value, FV is the future value, r is the discount rate, and n is the number of years.

If you graduate in three years:

PV = $5,000 / (1 + r)³

If you graduate in two years:

PV = $5,000 / (1 + r)²

Since the denominator in the second equation is smaller than the denominator in the first equation, the present value of the gift will be larger if you graduate a year earlier.

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in order to implement a particular organizational strategy, managers must determine the right kind of organizational:

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In order to implement a particular organizational strategy, managers must determine the right kind of organizational structure.

What is organizational strategy?Organizational strategy is a long-term plan for a company's growth and success. It encompasses the steps an organization will take to achieve its objectives and how it will allocate resources. In addition, it determines how the organization will collaborate and compete in the market while also managing its internal operations.

The strategy is intended to ensure that the company can perform to its maximum potential. What is an organizational structure? An organizational structure is the framework in which an organization is arranged, managed, and controlled. It's the manner in which a corporation can distribute responsibilities and roles across departments and hierarchical levels.

In addition, it defines how the organizational structure can operate, who makes decisions, and how they're executed. Furthermore, it explains the interactions between various departments, team members, and employees. The correct answer is: organizational structure.

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in the market for digital cameras, what would we expect to happen if the price of digital cameras rises?

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If the price of digital cameras rises in the market, what we expect to happen is the demand for digital cameras will decrease. This will happen because a rise in price leads to a fall in demand.

What is the relationship between price and demand?

The relationship between price and demand is inverse. When the price of a product goes up, the demand for the product goes down, and when the price of a product goes down, the demand for the product goes up.

On the other hand, when the price of a product falls, the demand for that product will increase.

In economics, the law of demand is a principle that describes consumer behavior when the price of a product rises, the demand for the product decreases, and when the price of a product decreases, the demand for the product increases.

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to determine the present value of a bond that pays semiannual interest, which of the following adjustments should not be made to compute the price of the bond? a. the number of annual periods should be doubled. b. the annual discount rate should be divided by 2. c. the annualized coupon should be split in half. d. the par value should be split in half. e. all of these choices are adjustments have to be made.

Answers

To determine the present value of a bond that pays semiannual interest, which of the following adjustments should not be made to compute the price of the bond   The number of annual periods should be doubled is not an adjustment that should be made to compute the price of a bond that pays semiannual interest.

What is the price of the bond?

The price of the bond is the sum of the present values of the coupon payments and the par value of the bond. The present value of each coupon payment is computed by dividing it by (1 + r/k)t where r is the annual discount rate, t is the number of years to maturity, and k is the number of coupon payments per year. The present value of the par value is computed by dividing it by (1 + r/k)t.

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a flight from portland, oregon, to spokane, washington, decreased in price from $232 to $198. what is the markdown percent?

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The markdown percent for the flight from Portland, Oregon, to Spokane, Washington, decreased in price from $232 to $198 is 14.6%.

To calculate the markdown percent of a flight from Portland, Oregon, to Spokane, Washington, decreased in price from $232 to $198, follow these steps:

Step 1: Calculate the dollar difference between the two prices.

$232 - $198 = $34

Step 2: Divide the dollar difference by the original price.

$34 / $232 = 0.146

Step 3: Multiply the result by 100 to calculate the markdown percent.

0.146 x 100 = 14.6% markdown

Therefore, the markdown percent for the flight from Portland, Oregon, to Spokane, Washington, decreased in price from $232 to $198 is 14.6%.

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in the united states, which group was most likely to be hurt by the north american free trade agreement? group of answer choices unskilled labor high-tech labor skilled labor owners of financial capital owners of capital equipment

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Unskilled labor was the group most likely to be hurt by the North American Free Trade Agreement (NAFTA). the correct answer is ''unskilled labor.''

Since Free Trade Agreement reduced trade barriers between the US, Canada, and Mexico, it made it easier for companies to move factories to Mexico where wages and other labor costs were lower. As a result, jobs that were previously held by unskilled labor in the US were now available to workers in Mexico.

This shift in jobs led to a decrease in wages and a rise in unemployment for unskilled labor in the US. This had a particularly damaging effect on low-income and minority communities that relied heavily on those jobs.

In conclusion, the correct answer is ''unskilled labor.''

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redistribution involves a centralized authority collecting goods and services, and redistributing the. group of answer choices true false

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The given statement "redistribution involve a centralized authority collecting goods and services and redistributing them" is True.

This means that the authority in charge collects resources from some people or organizations and then redistributes them to other people or organizations, typically to promote social welfare.

This redistribution is typically done in a way that is fair, equitable, and promotes equality among those who receive the resources. The centralized authority has the power to decide who receives the resources and how the resources are distributed.

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jeremiah invested $70,000 in an account paying an interest rate of 6.8% compounded daily. assuming no deposits or withdrawals are made, how long would it take, to the nearest tenth of a year, for the value of the account to reach $99,000?

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The account's worth would not reach $99,000 for 5 years. Investment is typically described as the "commitment of resources to gain subsequent rewards".

Future Value: What Is It?

Future value is the value of a present asset at some time in the future based on an anticipated rate of growth (FV). The future value is important to investors and financial planners because they use it to estimate how much an investment made now will be worth in the future.

Given:

P = $70000

R= 6.8%

SV = $99000

Compounded Daily for

A = P

99000 = 70000

= 1.414

= 1.414

= 1.414

also, n = 5 years

Hence, it would need 5 years for the account's value to reach $99,000.

An investment is a "commitment of money to obtain more money later" if money is involved.

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purchasers most commonly debit which account for transportation costs that they are responsible for paying?

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The account most commonly debited by purchasers for transportation costs they are responsible for paying is the "Transportation-In" account

Normally included in the cost of products sold, this account is intended to track the transportation expenses related to the acquisition of goods or materials.

Transportation-In costs cover a range of costs associated with moving products, including goods, insurance, handling, and customs taxes. These expenses are borne by the buyer and are consequently included in the price of the products or materials being purchased.

The buyer can keep track of and record these transportation costs apart from the price of the products by debiting the Transportation-In account. This data can be used to compute the gross margin on sales, estimate the true cost of inventories, and analyse the overall cost of a purchase.

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. a local finance company quotes an interest rate of 18.4 percent on one-year loans. so, if you borrow $20,000, the interest for the year will be $3,680. because you must repay a total of $23,680 in one year, the finance company requires you to pay $23,680/12, or $1,973.33, per month over the next 12 months. is the interest rate on this loan 18.4 percent? what rate would legally have to be quoted? what is the effective annual rate?

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the effective annual rate on this loan is 26.24%, which is higher than the quoted interest rate of 18.4%.

The quoted interest rate on the loan is indeed 18.4 percent. However, the finance company is using a method of calculating the interest rate that is not legally compliant, which is called the "add-on" interest method. Under this method, the interest is calculated based on the original principal amount of the loan, rather than on the declining balance as the loan is repaid.

To calculate the APR for this loan, we need to use a different formula that takes into account the declining balance as the loan is repaid. Using this formula, the APR for this loan would be approximately 23.14 percent.

To calculate the effective annual rate (EAR) for the loan, we can use the formula:

EAR = [tex](1+APR/n)^{n-1}[/tex]

where n is the number of compounding periods per year. For monthly compounding, n = 12. Plugging in the numbers, we get:

EAR =[tex](1+0.2314/12)^{12-1}[/tex]

       = 26.24%

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comparative advantage argument (what is floating rate debt, anyway?). how does the swap dealer hedge his currency risk as counterparty in the currency swap?

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The comparative advantage argument is a theory of international trade that explains how countries can mutually benefit by specializing in the production of goods in which they have a lower opportunity cost than other countries. In economics, floating rate debt refers to a type of debt instrument whose interest rate is variable or changes over time in response to market conditions such as inflation rates, economic growth, and other market variables.

This type of debt is different from fixed-rate debt, in which the interest rate remains constant for the duration of the debt. The swap dealer hedges his currency risk in a currency swap by entering into a financial agreement with another party, typically a bank or financial institution, to exchange two different currencies at a predetermined exchange rate. This is known as a currency swap, and it allows the swap dealer to reduce or eliminate the risk of currency fluctuations in the foreign currency.

In the currency swap, the swap dealer exchanges its own currency for the foreign currency of the counterparty, and the counterparty agrees to pay the swap dealer a fixed interest rate on the foreign currency. The swap dealer hedges its currency risk in the currency swap by taking a position in the currency market that offsets its exposure to currency fluctuations.

This can be done by buying or selling currencies in the foreign exchange market, or by entering into other financial contracts such as futures or options. By doing so, the swap dealer is able to protect itself against losses in the value of the foreign currency, and ensure that it receives the agreed-upon exchange rate in the currency swap.

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Blank are for profit financial organizations that have account holders

Answers

Financial institutions that are mutually owned by their customers and provide no more than 20% of total lending to businesses fall under the category of savings and loan associations. They provide individual consumers with checking and accounts, personal loans, and home mortgages.

if an increase in government spending of $278 billion increases equilibrium output by a total of $544 billion, then the marginal propensity to consume must be:

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If an increase in government spending of $278 billion increases equilibrium output by a total of $544 billion, then the marginal propensity to consume must be 0.5 (or 50%).

Marginal propensity to consume is a term used in economics to describe the relationship between changes in income and changes in consumption .The marginal propensity to consume (MPC) is the fraction of additional income that is spent on consumption.

This means that, for every additional dollar of government spending, the output increases by an additional $0.50, with $0.50 going to consumption and the remaining $0.50 going to other areas such as savings and investment.

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a firm that pursues a differentiation strategy will often find that the added expense of offering new or unique product features offsets the increase in perceived value, and profit margins begin to erode. this underscores the importance of control for firms pursuing a differentiation strategy. true or false

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True, a firm that pursues a differentiation strategy will often find that the added expense of offering new or unique product features offsets the increase in perceived value, and profit margins begin to erode.

Why is the statement correct?

This underscores the importance of control for firms pursuing a differentiation strategy. To maintain profitability, firms need to carefully manage costs and continuously innovate to keep their products or services distinct and valuable to consumers.

The differentiation strategy is indeed a tactic used by organizations to attract clients by offering them something distinctively different from what their rivals could be selling in the market.

Increasing competitive advantage is the key goal of implementing a strategy of differentiation. As previously said, the most common form of differentiation strategy is product differentiation.

When a business chooses this course of action, it succeeds greatly since its rivals are unable to match the standard.

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serena's gross monthly income is $4,000. her federal, state, and city taxes amount to $1,000 and a monthly ira contribution of $500 are deducted from her monthly pay. what is the maximum amount serena should spend on credit card payments?

Answers

Serena should not spend more than her remaining net income of $2,500 on credit card payments.

To determine the maximum amount Serena should spend on credit card payments, we need to first calculate her net monthly income after deducting taxes and IRA contribution:

Net monthly income = Gross monthly income - Taxes - IRA contribution

Net monthly income = $4,000 - $1,000 - $500

Net monthly income = $2,500

Assuming that Serena's other monthly expenses (such as rent, utilities, groceries, etc.) are already accounted for, she should not spend more than her remaining net income of $2,500 on credit card payments to avoid overspending and potential financial difficulties.

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Competitive advantage is gained in the value chain through which of the following types of activities? a. primaryb. establishing

Answers

Competitive advantage is gained in the value chain through primary activities. The answer is option a. primary.

What is a value chain?

A value chain is a set of activities that firms undertake to create and deliver a product or service that is valuable to the customers. The value chain comprises two main activities: primary activities and support activities. Primary activities are related to the production and delivery of the product, while support activities provide support for primary activities. Primary activities are as follows: Inbound, logistics, Operations, Outbound logistics, Marketing and sales Service. Therefore, competitive advantage is gained in the value chain through primary activities.

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in the past decade, the dollar value of world trade has . multiple choice question. sharply declined almost doubled only marginally increased remained steady

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The dollar value of global trade nearly doubled in the last ten years.

What two trends from the last ten years have had a big impact on worldwide marketing?

In the last ten years, four trends have had a substantial impact on the worldwide marketing environment. These include: a more aggressive approach to setting up global tariffs and quota systems. a fall in GDPs across the board and a resurgence of nationalism. the establishment of a globally networked marketspace

What significant global marketing trend did the last ten years bring about?

Global competition and customer growth are two significant trends in global marketing from the last ten years. Protectionism is the practice of using tariffs and quotas to protect a country's economy's key industries from international competition.

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you borrow $6,000 from credit card with an apr of 18.99%. if the interest rate is compound monthly, what will be your monthly payment if you want to pay of your loan in 5 years? what is the total interest you paid on the credit card?

Answers

In the following question, among the various parts to solve-  the monthly payment required to pay off the loan in 5 years is $137.36, the total interest paid on the credit card is $2,241.6.

Initial loan amount = $6,000APR = 18.99%

Compound Period = Monthly

Total Period = 5 years = 60 months

The monthly payment can be calculated as follows:

R = APR/12R = 18.99%/12R = 1.5825%Let's now calculate the monthly payment using the formula given below:

PMT = (P * R) / [1 - (1+R)^(-n)]where,PMT is the monthly payment

P is the principal amount

R is the monthly interest rate (expressed as a decimal)

N is the total number of payments

Since the loan period is 5 years or 60 months,

N = 60.

Substituting the given values, we get:

PMT = (6000 * 1.5825/100) / [1 - (1+1.5825/100)^(-60)]PMT = $137.36

Therefore, the monthly payment required to pay off the loan in 5 years is $137.36.

Now, let's calculate the total interest paid on the credit card for 5 years using the formula given below: Total Interest = Total Payment - Principal Amount where, Total Payment = Monthly Payment * Total PeriodTotal Payment = $137.36 * 60Total Payment = $8,241.6 Substituting the given values, we get:

Total Interest = 8241.6 - 6000

Total Interest = $2,241.6

Therefore, the total interest paid on the credit card is $2,241.6.

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13.if the college put a price ceiling on meals at $4 a meal, what is the quantity bought, the shortage of meals, and the maximum price that someone is willing to pay for the last meal available?

Answers

If the college put a price ceiling on meals at $4 a meal, there are 1500 meals bought, creating a shortage of 1500 at the new price. The maximum price a consumer would be willing to pay for the last meal is $10.

In an effort to stop the market price from growing over a given level, a legally mandated maximum price in the market that providers cannot surpass. A maximum price must be set below the free market price in order to be effective.

Macroeconomics is a subfield of economics that focuses on the behaviour of the economy as a whole, including the markets, firms, customers, and governments. Macroeconomics studies trends in the economy as a whole, including inflation, price levels, economic growth rates, national income, GDP, and changes in unemployment.

An economy is said to be experiencing economic growth when its total output rises. To support economic policies that will support growth, progress, and growing living standards, macroeconomists work to understand the elements that either encourage or delay economic growth.

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on january 1, price co. called its $800,000, 8% bonds with a carrying value of $790,000. the call price is $788,000. the bonds originally were issued to yield 9%. on the call date, the company should recognize

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On January 1, Price Co. called its $800,000, 8% bonds with a carrying value of $790,000. The call price is $788,000. The bonds originally were issued to yield 9%. On the call date, the company should recognize $2,000 gain.

Therefore, the correct option is option C: a $2,000 gain.Option C is correct because the carrying value of the bonds is $790,000. The call price is $788,000; hence, the company would save $2,000 if it calls its bonds on January 1. When the company pays the bondholders the call price of $788,000, the bonds are retired.

Because the carrying value of the bonds is $790,000, the company must record a gain of $2,000 (the difference between the carrying value and the call price) when the bonds are retired. Therefore, on the call date, the company should recognize a $2,000 gain.

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