Effective Interest Amortization of Bond Premium or Discount Video Lessons

Concept

# Problem: A $100,000, 10-year, 8% bond that pays interest semiannually was sold for$87,539 when the market rate of interest was 10%. Using the effective-interest method, determine how much of the interest expense, to the nearest dollar, for the second interest period? A) $4,377 B)$4,596 C) $4,396 D)$4,158

###### Problem Details

A $100,000, 10-year, 8% bond that pays interest semiannually was sold for$87,539 when the market rate of interest was 10%. Using the effective-interest method, determine how much of the interest expense, to the nearest dollar, for the second interest period?

A) $4,377 B)$4,596

C) $4,396 D)$4,158