On January 1, 2019, Bota Company issued a 3-year bonds with a face value of P5,000,000 at 99. The stated or nominal rate is 10% and the interest is payable annually on December 31. The entity paid a bond issue cost of P150,000 which should be deducted from the market price of the bonds to get the final price of the issuance. What is the effective or yield rate of the issuance?

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
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On January 1, 2019, Bota Company issued a 3-year bonds with a face value of P5,000,000 at 99. The stated or nominal rate is 10% and the interest is payable annually on December 31. The entity paid a bond issue cost of P150,000 which should be deducted from the market price of the bonds to get the final price of the issuance. What is the effective or yield rate of the issuance?
 
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