the effective interest rate method of amortization. 1. Assume that on January 1 , a firm issues 10 -years bonds with a par value of $300,000, and a 10% coupon rate. At the time of issue, the market rate of interest on bonds of similar risk and maturity was 8%. Interest is payable annually on December 31 each year. a. Prepare an amortization table for the bonds (show just the first three years.) b. Suppose immediately after making the interest payment at the end of year 3, the firm decides to repurchase the bonds in the open market. At that time, the market rates of interest are 5%. What will the firm have to pay (market value) to repurchase the bonds? Will the firm report a gain, a loss, or neither on the repurchase of the bonds? How much is the gain or loss on the repurchase transaction that the firm would report in its financial statements