Discount-Mart issues $11 million in bonds on January 1, 2021. The bonds have a seven-year term and
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Discount-Mart issues $11 million in bonds on January 1, 2021. The bonds have a seven-year term and pay interest semiannually on June 30 and December 31 each year. Below is a partial bond amortization schedule for the bonds:
Date | Cash Paid | Interest Expense | Increase in Carrying Value | Carrying Value | ||||||||
01/01/2021 | $ | 9,911,149 | ||||||||||
06/30/2021 | $ | 440,000 | $ | 495,557 | $ | 55,557 | 9,966,706 | |||||
12/31/2021 | 440,000 | 498,335 | 58,335 | 10,025,041 | ||||||||
06/30/2022 | 440,000 | 501,252 | 61,252 | 10,086,293 | ||||||||
12/31/2022 | 440,000 | 504,315 | 64,315 | 10,150,608 | ||||||||
What is the stated annual rate of interest on the bonds? (Hint: Be sure to provide the annual rate rather than the six-month rate.) (Do not round your intermediate calculations.)
Related Book For
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
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