A company issues $10,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2014. Interest is paid on June 30 and December 31. The proceeds from the…

A company issues $10,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2014. Interest is paid on June 30 and December 31. The proceeds from the bonds are $9,802,072. Using effective-interest amortization, how much interest expense will be recognized in 2014?

a.   $390,000

b.   $780,000

c.   $784,249

d.   $784,166

The answer is D: ($9,802,072 × .04) + (9,804,155 × .04) = $784,249

Order the answer to view it

Assignment Solutions
Assignment Solutions