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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&#39;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.

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