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A company issues $10,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2014. Interest is paid on June 30 and December 31. The proceeds from the...
A company issues $10,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2014. Interest is paid on June 30 and December 31. The proceeds from the bonds are $9,802,072. Using effective-interest amortization, how much interest expense will be recognized in 2014?
a. $390,000
b. $780,000
c. $784,249
d. $784,166
The answer is D: ($9,802,072 × .04) + (9,804,155 × .04) = $784,249