00:01
Hello students, let us solve the problem.
00:02
So, here it says the company issued 10 % of 5 years bond.
00:07
The company has issued 10 .0 % of 5 years bond with a par value of $240 ,000 and the market rate of a bond were issued at 11 .0%.
00:34
Using the effective interest method, the amount of interest expenses for the second semi -annual interest is, we have to choose from the option, the right answer, that is $12 ,000 is our option a.
00:55
Option b is $12 ,741 .16 and third is $12 ,702 .52 and fourth option is $24 ,000 and fifth option is $25 ,443 .68.
01:19
So, these are the information given in the question.
01:22
Let us start solving the problem.
01:26
So, interest expenses for first semi -annual interest period is, so we have the following steps to substitute this, that is $230 ,954 into 11 % into 11 % divided by, so which gives us $12 ,702 .52...