On January 1, 2017, Hoist Up Company (HUC), purchased bonds of Southern Inc. that had the following characteristics: 12% coupon rate, $300,000 face value, maturing on December 31, 2021, and interest paid annually on December 31. The bonds were purchased by HUC for $322,744.72.
The fair value of the bonds at December 31, 2017 was $320,500. The fair value of the bonds at December 31, 2018 was $309,000. The bonds are not considered to be impaired.
1) What was the effective yield on these bonds?
2) Prepare a bond amortization table for this bond investment.
I understand the formula for the bond amort. table, just need help figuring out the PV rate to begin the amort. chart and the market rate to use? plus having trouble undertanding the effective yield?