Question

QUESTIONS "A company issues $16200000, 5.8%, 20-year bonds to yield 6% on January 1, Year 17. Interest is paid on June 30 and December 31. The proceeds from the bonds are $15825541. Using effective interest amortization, how much interest expense will be recognized in Year 177" O "$469,800 O "939,600" "$949,556" "5949,680"

Answer 1

Solution: working Interest expense for Jan 1 to June 30 | 15825541*6%*6/12 Discount amortized in first 6 month (15825541 *6%*6/12)-(16200000*5.8%*6/12) Interest expense for July 1 to Dec 31 (15825541+4966)*6%*6/12 Total interest expense for 2017 474766+474915 Hence last option is correct. 474,766 4,966 474,915 949,681