Effective Interest Amortization of Bond Premium or Discount Video Lessons

Video Thumbnail

Concept

Problem: Cainas Cookies issues a $100,000, 10 year bond for $93,500 on 1/1/15.  The stated rate of interest was 8% and the market rate was 10% when the bond was sold, and interest is paid annually.  How much interest expense will be recorded on 12/31?

FREE Expert Solution
Problem Details

Cainas Cookies issues a $100,000, 10 year bond for $93,500 on 1/1/15.  The stated rate of interest was 8% and the market rate was 10% when the bond was sold, and interest is paid annually.  How much interest expense will be recorded on 12/31?

Frequently Asked Questions

What scientific concept do you need to know in order to solve this problem?

Our tutors have indicated that to solve this problem you will need to apply the Effective Interest Amortization of Bond Premium or Discount concept. You can view video lessons to learn Effective Interest Amortization of Bond Premium or Discount. Or if you need more Effective Interest Amortization of Bond Premium or Discount practice, you can also practice Effective Interest Amortization of Bond Premium or Discount practice problems.

What is the difficulty of this problem?

Our tutors rated the difficulty ofCainas Cookies issues a $100,000, 10 year bond for $93,500 o...as medium difficulty.

What professor is this problem relevant for?

Based on our data, we think this problem is relevant for Professor Cainas' class at USF.