1. At what premium or discount does this issue sell?

2.What effective interest rate should Jolie use for its bond table?

On June 30, 2005 Jolie Co. issues $300,000 of 10 year, 11% bonds. The bonds pay interest semiannually on June 30th and December 31st. The bonds have a call provision which allows Jolie Co. to repurchase them at a price of 108 any time after the first year. The market yield for the bonds at the date of issue is 10%. Jolie Co. pays $10,000 in issuance costs. year end. Other information: a. Jolie has a December 31"' year b. Jolie calls the bonds on 3/31/07, exactly three months after the last coupon payment was made. The market price at this time is 112. c. The enacted tax rate is 40% for all years