Tony Hawk's Adventure (THA) issued callable bonds on January 1, 2021. THA's accountant has projected the following amortization schedule from issuance until maturity: Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value 01/01/2021 331,652 06/30/2021 10,500 13,266 2,766 334,418 12/31/2021 10,500 13,377 2,877 337,295 06/30/2022 10,500 13,492 2,992 340,287 12/31/2022 10,500 13,611 3,111 343,398 06/30/2023 10,500 13,736 3,236 346,634 12/31/2023 10,500 13,866 3,366 350,000 What is the annual market interest rate on the bonds?
Tony Hawk's Adventure (THA) issued callable bonds on January 1, 2021. THA's accountant has projected the following amortization schedule from issuance until maturity: Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value 01/01/2021 331,652 06/30/2021 10,500 13,266 2,766 334,418 12/31/2021 10,500 13,377 2,877 337,295 06/30/2022 10,500 13,492 2,992 340,287 12/31/2022 10,500 13,611 3,111 343,398 06/30/2023 10,500 13,736 3,236 346,634 12/31/2023 10,500 13,866 3,366 350,000 What is the annual market interest rate on the bonds?
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 4EA: On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated...
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Tony Hawk's Adventure (THA) issued callable bonds on January 1, 2021. THA's accountant has projected the following amortization schedule from issuance until maturity:
| Date | Cash Paid | Interest Expense |
Increase in Carrying Value |
Carrying Value |
| 01/01/2021 | 331,652 | |||
| 06/30/2021 | 10,500 | 13,266 | 2,766 | 334,418 |
| 12/31/2021 | 10,500 | 13,377 | 2,877 | 337,295 |
| 06/30/2022 | 10,500 | 13,492 | 2,992 | 340,287 |
| 12/31/2022 | 10,500 | 13,611 | 3,111 | 343,398 |
| 06/30/2023 | 10,500 | 13,736 | 3,236 | 346,634 |
| 12/31/2023 | 10,500 | 13,866 | 3,366 | 350,000 |
What is the annual market interest rate on the bonds? (Hint: Be sure to provide the annual rate rather than the six-month rate.) (Do not round your intermediate calculations.)
Multiple Choice
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6%.
-
3%.
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7%.
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8%.
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