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On January 1, 2014, Huff Corp. issued $1,000,000 face value of 10% per year bonds (with annual interest payments to be paid each 31st December)
On January 1, 2014, Huff Corp. issued $1,000,000 face value of 10% per year bonds (with annual interest payments to be paid each 31st December) at a time when the market demanded an 11% return. The original maturity was ten years. Using the effective interest rate method of amortization, calculate the interest expense for 2015.
a. $103,521.85 b. $103,909.25 c. $207,431.09
B is the right answer but I keep getting A. I need to know what is the correct way to solve this problem using a BA II plus calculator.
Inputs | 2nd AMORT | |||
N | 10 | P1 | 1 | |
I/Y | 11 | P2 | 1 | |
PV | CPT=941,107.68 | Bal | 944,629.52 | |
PMT | -100,000 | PRN | 3,521.84 | |
FV | -1,000,000 | INT | 103,521.84 |
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