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Nickel Inc. bought $400,000 of 3-year, 7% bonds as an investment on December 31, 2017 for $428,000. The investment receives i

Multiple Choice $9,422 gain. $12,000 loss. $92,533 loss. $16,000 gain.

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Answer #1

Book value of investment

Annually amortization = 28000/3 = 9333

2018 Amortization = 9333*4/12 = 3111

Amortization for 80000 investment = 3111*80000/400000 = 622

Book value of investment on the date of retirement = (428000*80000/400000)-622 = 84978

Retirement value = 80000*1.18/100 = 94400

Gain = 94400-84978 = 9422

So answer is a) $9422 Gain

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