Discount-Mart issues $20 million in bonds on January 1, 2021. The bonds have a seven-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 Cash Paid Interest Expense Increase in Carrying Value Carrying Value 01/01/2021 18,141,003 06/30/2021 1,000,000 1,088,460 88,460 18,229,463 12/31/2021 1,000,000 1,093,768 93,768 18,323,231 06/30/2022 1,000,000 1,099,394 99,394 18,422,625 12/31/2022 1,000,000 1,105,358 105,358 18,527,983 What is the stated 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.) iple Choice 12%. 10%. 11%. 5%.
Discount-Mart issues $20 million in bonds on January 1, 2021. The bonds have a seven-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 Cash Paid Interest Expense Increase in Carrying Value Carrying Value 01/01/2021 18,141,003 06/30/2021 1,000,000 1,088,460 88,460 18,229,463 12/31/2021 1,000,000 1,093,768 93,768 18,323,231 06/30/2022 1,000,000 1,099,394 99,394 18,422,625 12/31/2022 1,000,000 1,105,358 105,358 18,527,983 What is the stated 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.) iple Choice 12%. 10%. 11%. 5%.
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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Discount-Mart issues $20 million in bonds on January 1, 2021. The bonds have a seven-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 | Cash Paid | Interest Expense |
Increase in Carrying Value |
Carrying Value |
|
01/01/2021 |
18,141,003 | |||
| 06/30/2021 | 1,000,000 | 1,088,460 | 88,460 | 18,229,463 |
| 12/31/2021 | 1,000,000 | 1,093,768 | 93,768 | 18,323,231 |
| 06/30/2022 | 1,000,000 | 1,099,394 | 99,394 | 18,422,625 |
| 12/31/2022 | 1,000,000 | 1,105,358 | 105,358 | 18,527,983 |
What is the stated 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.)
iple Choice
-
12%.
-
10%.
-
11%.
-
5%.
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