Calculate the bond discount at issuance, Finance Basics

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Calculate the bond discount at issuance

Problem:

On January 1, 2014, when the market interest rate was 14%, Luba Corporation issued bonds in the face amount of $500,000 with interest at 12% payable semiannually. The bonds mature on December 31, 2023.

Required:

Calculate the bond discount at issuance. How much of the discount should be amortized by the effective interest method on July 1, 2014?

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Finance Basics: Calculate the bond discount at issuance

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