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What is the annual market interest rate on the bonds

What is the annual market interest rate on the bonds? (Hint: Be sure to provide the annual rate rather than the six month rate.)

a.4%.

b.3.5%.

c.7%.

d.8%.

 

 

107. THA buys back the bonds for $196,000 immediately after the interest payment on 12/31/2015 and retires them. What gain or loss, if any, would THA record on this date?

a.No gain or loss.

b.$370 gain.

c.$4,000 gain.

d.$1,242 loss.

 

 

Use the following information to answer the next 6 questions:

 

X2 issued callable bonds on January 1, 2015. The bonds pay interest annually on December 31 each year. X2's accountant has projected the following amortization schedule from issuance until maturity:

 

 

Date

Cash

Paid

Interest

Expense

Decrease in Carrying Value

Carrying Value

    1/1/2015

 

 

 

$104,212

12/31/2015

$7,000

$6,253

$747

103,465

12/31/2016

  7,000

  6,208

  792

102,673

12/31/2017

  7,000

  6,160

  840

101,833

12/31/2018

  7,000

  6,110

  890

100,943

12/31/2019

  7,000

  6,057

  943

100,000

 

 

108. X2 issued the bonds:

a.At par.

b.At a premium.

c.At a discount.

d.Cannot be determined from the given information.

 

 

109. X2 issued the bonds for:

a.$100,000.

b.$107,000.

c.$104,212.

d.Cannot be determined from the given information.

 

 

110. The X2 bonds have a life of:

a.3 years.

b.4 years.

c.5 years.

d.Cannot be determined from the given information.

 

 

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

a.3%.

b.3.5%.

c.6%.

d.7%.

 

 

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

a.3%.

b.3.5%.

c.6%.

d.7%.

 

 

113. X2 buys back the bonds for $103,000 immediately after the interest payment on 12/31/2016 and retires them. What gain or loss, if any, would X2 record on this date?

a.No gain or loss.

b.$3,000 gain.

c.$1,202 loss.

d.$327 loss

Jan 27 2020 View more View Less

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