If Klausenheimer decided to use the fair value method to account for the bonds, then what would
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Question:
Klausenheimer Inc. just issued a $80 million bond. The bond has a coupon rate of 5% and a maturity of three years. The coupon is payable at the end of each year. The effective interest rate at the beginning of year 1 was 8%, beginning of year 2 was 5%, and beginning of year 3 was 2%. Make sure to show your calculations where applicable.
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