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Tony Hawk's Adventure (THA) issued callable bonds on January 1, 2021. THA's accountant has projected the following amortization schedule from issuance until maturity: Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value 01/01/2021       331,652 06/30/2021 10,500 13,266 2,766 334,418 12/31/2021 10,500 13,377 2,877 337,295 06/30/2022 10,500 13,492 2,992 340,287 12/31/2022 10,500 13,611 3,111 343,398 06/30/2023 10,500 13,736 3,236 346,634 12/31/2023 10,500 13,866 3,366 350,000   What is the annual market interest rate on the bonds?

Tony Hawk's Adventure (THA) issued callable bonds on January 1, 2021. THA's accountant has projected the following amortization schedule from issuance until maturity: Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value 01/01/2021       331,652 06/30/2021 10,500 13,266 2,766 334,418 12/31/2021 10,500 13,377 2,877 337,295 06/30/2022 10,500 13,492 2,992 340,287 12/31/2022 10,500 13,611 3,111 343,398 06/30/2023 10,500 13,736 3,236 346,634 12/31/2023 10,500 13,866 3,366 350,000   What is the annual market interest rate on the bonds?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Tony Hawk's Adventure (THA) issued callable bonds on January 1, 2021. THA's accountant has projected the following amortization schedule from issuance until maturity:

Date Cash Paid Interest
Expense		 Increase in
Carrying Value		 Carrying
Value
01/01/2021       331,652
06/30/2021 10,500 13,266 2,766 334,418
12/31/2021 10,500 13,377 2,877 337,295
06/30/2022 10,500 13,492 2,992 340,287
12/31/2022 10,500 13,611 3,111 343,398
06/30/2023 10,500 13,736 3,236 346,634
12/31/2023 10,500 13,866 3,366 350,000

 

What is the annual market interest rate on the bonds? (Hint: Be sure to provide the annual rate rather than the six-month rate.) (Do not round your intermediate calculations.)

 

Multiple Choice
  •  

    6%.

  •  

    3%.

  •  

    7%.

  •  

    8%.

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