(b)Set up a schedule of interest expense and discount amortization under the effective-interest method. (Round intermediatecalculations to 5 decimal places, e.g. 1.25124 and final answer to 2 decimal places, e.g. 38,548.25.)YearJan.1,2025Dec.31,2025Dec.31,2026Dec.31,2027Dec.31,2028Dec.31.2029LACashPaidOtASchedule of Discount AmortizationEffective-Interest MethodInterestExpensetA$DiscountAmortized0+ACarryingValue of Bond227 Donald Martin Company sells 8% bonds having a maturity value of $2,460,000 for $2,273,490.00. The bonds are dated January 1,2025, and mature January 1, 2030. Interest is payable annually on January 1.(a)* Your answer is incorrect.Determine the effective-interest rate. (Round present value factor to 5 decimal places, e.g. 1.25124 and final answer to O decimalplaces, e.g. 18%.)The effective-interest rate0.63%

Data: pmt=$196800 nper=5 year FV=$2,460,000 PV=$2,273,490 Working Note#1 Calculation of interest…

(b) Set up a schedule of interest expense and discount amortization under the effective-interest method. (Round intermediate calculations to 5 decimal places, e.g. 1.25124 and final answer to 2 decimal places, e.g. 38,548.25.) Year Jan. 1, 2025 Dec. 31, 2025 Dec. 31, 2026 Dec. 31, 2027 Dec. 31, 2028 Dec. 31, 2029 Cash Paid 0 tA Schedule of Discount Amortization Effective-Interest Method Interest Expense 0 GA Discount Amortized 0 tA $ Carrying Value of Bond 227

(b) Set up a schedule of interest expense and discount amortization under the effective-interest method. (Round intermediate calculations to 5 decimal places, e.g. 1.25124 and final answer to 2 decimal places, e.g. 38,548.25.) Year Jan. 1, 2025 Dec. 31, 2025 Dec. 31, 2026 Dec. 31, 2027 Dec. 31, 2028 Dec. 31, 2029 Cash Paid 0 tA Schedule of Discount Amortization Effective-Interest Method Interest Expense 0 GA Discount Amortized 0 tA $ Carrying Value of Bond 227

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

(b)
Set up a schedule of interest expense and discount amortization under the effective-interest method. (Round intermediate
calculations to 5 decimal places, e.g. 1.25124 and final answer to 2 decimal places, e.g. 38,548.25.)
Year
Jan.
1,
2025
Dec.
31,
2025
Dec.
31,
2026
Dec.
31,
2027
Dec.
31,
2028
Dec.
31.
2029
LA
Cash
Paid
O
tA
Schedule of Discount Amortization
Effective-Interest Method
Interest
Expense
tA
$
Discount
Amortized
0
+A
Carrying
Value of Bond
227

Donald Martin Company sells 8% bonds having a maturity value of $2,460,000 for $2,273,490.00. The bonds are dated January 1,
2025, and mature January 1, 2030. Interest is payable annually on January 1.
(a)
* Your answer is incorrect.
Determine the effective-interest rate. (Round present value factor to 5 decimal places, e.g. 1.25124 and final answer to O decimal
places, e.g. 18%.)
The effective-interest rate
0.63
%

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