Chapter 14 Long Term Liabilities

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4 Terms

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Bond Advantages

Bonds do not affect owner control, interest on bonds is tax deductible, and bonds can potentially increase return on equity

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Bond disadvantages

Bonds can potentially decrease return on equity and require payments of both periodic interest and the par value at maturity

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Maturity of bonds (payment of par)

When the bond issuer pays the par value back to the bondholder

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Contract rate

The interest the bond issuer pays in cash