Effective Interest Amortization of Bond Premium or Discount Video Lessons

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Problem: A $50,000, 5%, 2 year bond was issued on 1/1/15 for $47,325, and interest is paid annually on the bond.  The interest expense will be: A. Greater than cash interest paid. B. Equal to cash interest paid. C. Less than cash interest paid. D. Not enough information.

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Problem Details

A $50,000, 5%, 2 year bond was issued on 1/1/15 for $47,325, and interest is paid annually on the bond.  The interest expense will be:

A. Greater than cash interest paid.

B. Equal to cash interest paid.

C. Less than cash interest paid.

D. Not enough information.

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