In January 1 20x1 abc company issued a 1000000 10 year bond with a stated interest rate of 9% payable annually every December 31st the market interest rate is 7% the bonds price is 1140160.

CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN:9780357110362
Author:Murphy
Publisher:Murphy
Chapter3: Income Sources
Section: Chapter Questions
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In January 1 20x1 abc company issued a 1000000 10 year bond with a stated interest rate of 9% payable annually every December 31st the market interest rate is 7% the bonds price is 1140160.
g) If they use straight-line
amortization, how much
will be their interest
expense for 20X1?
h) If they use straight-line
amortization, will interest
expense for 20X2 be the
same as, higher or lower
than interest expense for
20X1?
i) If they use effective
interest amortization how
much will their interest
expense be in 20X1?
[Choose ]
[Choose ]
[Choose ]
Transcribed Image Text:g) If they use straight-line amortization, how much will be their interest expense for 20X1? h) If they use straight-line amortization, will interest expense for 20X2 be the same as, higher or lower than interest expense for 20X1? i) If they use effective interest amortization how much will their interest expense be in 20X1? [Choose ] [Choose ] [Choose ]
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