On January 1, 2021, an investor paid $291,000 for bonds with a face amount of $300,000....
On January 1, 2021, an investor paid $291,000 for bonds with a face amount of $300,000. The contract rate of interest is 8% while the current market rate of interest is 10%. Using the effective interest method, how much interest income is recognized by the investor in 2022 (assume annual interest payments and amortization)?
Multiple Choice
-
$23,280.
-
$25,140.
-
$29,100.
-
$29,610.
Homework Answers
Interest income = Amount paid* market rate of interest
= $291000*10%
= $29,100
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On January 1, 2021, an investor paid $291,000 for bonds with a
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