Discount-Mart issues $14 million in bonds on January 1, 2024. The bonds have a nine-year term and pay interest semiannually on June 30 and December 31 each year. Below is a partial bond amortization schedule for the bonds: Date 01/01/2024 06/30/2024 12/31/2024 06/30/2025 12/31/2025 Cash Paid Interest Expense $840,000 $881,421 840,000 884,320 840,000 887,423 840,000 890,742 Increase in Carrying Value $41,421 44,320 47,423 50,742 Carrying Value $12,591,728 12,633,149 12,677,469 12,724,892 12,775,634 What is the market annual rate of interest on the bonds? (Hint: Be sure to provide the annual rate rather than the six-month rate.) (Do not round your intermediate calculations.)

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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Discount-Mart issues $14 million in bonds on January 1, 2024. The bonds have a nine-year term and pay interest semiannually on June 30 and December 31 each year.
Below is a partial bond amortization schedule for the bonds:
Date
01/01/2024
06/30/2024
12/31/2024
06/30/2025
12/31/2025
Cash Paid
$840,000
840,000
840,000
840,000
Interest
Expense
$881,421
884,320
887,423
890,742
Increase in
Carrying Value
$41,421
44,320
47,423
50,742
Carrying
Value
$12,591,728
12,633,149
12,677,469
12,724,892
12,775,634
What is the market annual rate of interest on the bonds? (Hint: Be sure to provide the annual rate rather than the six-month rate.) (Do not round your intermediate
calculations.)
Transcribed Image Text:Discount-Mart issues $14 million in bonds on January 1, 2024. The bonds have a nine-year term and pay interest semiannually on June 30 and December 31 each year. Below is a partial bond amortization schedule for the bonds: Date 01/01/2024 06/30/2024 12/31/2024 06/30/2025 12/31/2025 Cash Paid $840,000 840,000 840,000 840,000 Interest Expense $881,421 884,320 887,423 890,742 Increase in Carrying Value $41,421 44,320 47,423 50,742 Carrying Value $12,591,728 12,633,149 12,677,469 12,724,892 12,775,634 What is the market annual rate of interest on the bonds? (Hint: Be sure to provide the annual rate rather than the six-month rate.) (Do not round your intermediate calculations.)
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