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Severson Corporation issued $1,000,000 of 10% bonds on January 1, 2020, due on January 1, 2022. The interest is to be paid semi-annually on June

Severson Corporation issued $1,000,000 of 10% bonds on January 1, 2020, due on January 1, 2022. The interest is to be paid semi-annually on June 30th and December 31. The bonds were sold to yield 3% effective annual interest. Severson Corporation closes its books annually on December 31.

What is the rate that should be taken to the tables to determine the present value?

  1. 10%

  2. 5%

  3. 3%

  4. 1.5%

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