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Discount-Mart issues $12 million in bonds on January 1, 2012. They have a seven-year term and pay interest semiannually. This is the partial bond amortization
Discount-Mart issues $12 million in bonds on January 1, 2012. They have a seven-year term and pay interest semiannually. This is the partial bond amortization schedule for the bonds. |
Date | Cash Paid | Interest Expense | Increase in Carrying Value | Carrying Value |
1/1/12 | $10,732,425 | |||
6/30/12 | $360,000 | $429,297 | $69,297 | 10,801,722 |
12/31/12 | 360,000 | 432,069 | 72,069 | 10,873,791 |
6/30/13 | 360,000 | 434,952 | 74,952 | 10,948,743 |
12/31/13 | 360,000 |
What is the stated annual rate of interest on the bonds?
6%.
3%.
7%.
8%.
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