Lopez Plastics Co. (LPC) issued callable bonds on January 1, 2021. LPC's accountant has projected the following a schedule from issuance until maturity: Cash Effective Decrease in Outstanding Date interest interest balance balance 1/1/2021 24 207,020 6/30/2021 24 7,000 2$ 6,211 2$ 789 206,230 12/31/2021 7,000 6,187 813 205,417 6/30/2022 7,000 6,163 837 204,580 12/31/2022 7,000 6,137 863 203,717 6/30/2023 7,000 6,112 888 202,829 12/31/2023 7,000 6,085 915 201,913 6/30/2024 7,000 6,057 943 200,971 12/31/2024 7,000 6,029 971 200,000 What is the annual stated interest rate on the bonds?
Lopez Plastics Co. (LPC) issued callable bonds on January 1, 2021. LPC's accountant has projected the following a schedule from issuance until maturity: Cash Effective Decrease in Outstanding Date interest interest balance balance 1/1/2021 24 207,020 6/30/2021 24 7,000 2$ 6,211 2$ 789 206,230 12/31/2021 7,000 6,187 813 205,417 6/30/2022 7,000 6,163 837 204,580 12/31/2022 7,000 6,137 863 203,717 6/30/2023 7,000 6,112 888 202,829 12/31/2023 7,000 6,085 915 201,913 6/30/2024 7,000 6,057 943 200,971 12/31/2024 7,000 6,029 971 200,000 What is the annual stated interest rate on the bonds?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Stated rate of interest is the rate of interest which is actually paid to the bondholders. Stated rate is mentioned on the bond coupon therefore it is called as coupon rate also.
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