Question
Novak Company sells 8% bonds having a maturity value of $3,170,000 for $2,929,660. The bonds are...
Novak Company sells 8% bonds having a maturity value of $3,170,000 for $2,929,660. The bonds are dated January 1, 2020, and mature January 1, 2025. Interest is payable annually on January 1.
Determine the effective-interest rate. (Round answer to 0 decimal places, e.g. 18%.)
| The effective-interest rate | % |
Set up a schedule of interest expense and discount amortization under the effective-interest method. (Round intermediate calculations to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 38,548.)
|
Schedule of Discount Amortization |
||||||||
|
|
Interest |
Interest |
Discount |
Carrying |
||||
| Jan. 1, 2020 | $ | $ | $ | $ | ||||
| Dec. 31, 2020 | ||||||||
| Dec. 31, 2021 | ||||||||
| Dec. 31, 2022 | ||||||||
| Dec. 31, 2023 | ||||||||
| Dec. 31, 2024 | ||||||||
Homework Answers
Answer #1
Effective rate is calculated in
excel by using formula = Rate(nper,pmt,pv,fv,0)
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