Question 33
4 pts
X2 issued callable bonds on January 1, 2021. The bonds pay interest annually on December 31 each year. X2's accountant has
projected the following amortization schedule from issuance until maturity:
Interest
Decrease in
Carrying
Date Cash Paid Expense
Carrying Value
Value
01/01/2021
$104,212
12/31/2021 $7,000 $6,253
$747
103,465
12/31/2022 7,000 6,208
792
102,673
12/31/2023 7,000 6,160
840
101,833
12/31/2024 7,000 6,110
890
100,943
12/31/2025 7,000 6,057
943
100,000
What is the annual market interest rate on the bonds?
? 3%.
3.5%
? 6%
? 7%