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Aggie Corporation issued $325,000, 6%, 10-year bonds on January 1, 2015 for $378,147. This price resulted in an effective interest rate of 4%. Interest is
Aggie Corporation issued $325,000, 6%, 10-year bonds on January 1, 2015 for $378,147.
This price resulted in an effective interest rate of 4%. Interest is payable semiannually on June 30
and December 31. Aggie uses the effective-interest method to amortize bond premium or discount.
Identify the total cost of borrowing that Aggie will incur over the life of this debt:
A. | $141,853 | |
B. | $195,000 | |
C. | $248,147 | |
D. | $150,647 | |
E. | $76,853 |
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