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What is the annual market interest rate on the bonds

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Question - ABC company issued a bond on Jan. 1st, 2018. ABC Company prepared the following amortization schedule for the bond.

Date Cash Paid Interest Expense Decrease in Carrying Value Carrying Value

1/1/2018 $104,212

12/31/2018 7000 $6,253 $747 103,465

12/31/2019 7,000 6,208 792 102,673

12/31/2020 7,000 6,160 840 101,833

12/31/2021 7,000 6,110 890 100,943

12/31/2022 7,000 6,057 943 100,000

1. The bonds have a life of:

a. Cannot be determined from the given information.

b. 3 years.

c. 5 years.

d. 4 years.

2. What is the annual stated interest rate on the bonds?

a. 3%.

b. 7%

c. 3.5%.

d. 6%.

3. What is the annual market interest rate on the bonds?

a. 3.5%

b. 3%

c. 6%

d. 7%

Reference no: EM132773869

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