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VashaNatasha [74]
3 years ago
11

On january​ 1, 2017, finch company issued​ $89,000 of​ five-year, 8% bonds when the market interest rate was​ 12%. the issue pri

ce of the bonds was​ $73,000. finch uses the​ effective-interest method of amortization for bond discount. semiannual interest payments are made on june 30 and december 31 of each year. how much interest expense will be recorded when the first interest payment is​ made? (round your answer to the nearest dollar​ number.)
Business
1 answer:
Amanda [17]3 years ago
8 0

Answer:

$4,380

Explanation:

The computation of the interest expense recorded in the first year is shown below:

= Issued price of the bond × market interest rate ÷ semi annual period

= $73,000 × 12% ÷ 2

= $73,000 × 6%

= $4,380

Hence, the interest expense would be recorded when the interest payment is made is $4,380

We simply applied the above formula

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Answer:

Effect Annual rate of return =17.22%

Explanation:

The Effective annual rate of return is the equivalent rate earned where compounding is done frequently at period or interval  less than a year.

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