X2 issued callable bonds on January 1, 2012. The bonds pay interest annually on

Question

X2 issued callable bonds on January 1, 2012. The bonds pay interest annually on December 31 each year. X2's accountant has projected the following amortization schedule from issuance until maturity:

What is the annual market interest rate on the bonds? (Round your answer to the nearest whole percent.)

12%

5%

10%

6%

X2 issued callable bonds on January 1, 2012. The bonds pay interest annually on December 31 each year. X2's accountant has projected the following amortization schedule from issuance until maturity:

Explanation / Answer

correct option is "C" - 10%

[market interest rate = 15437 / 308743 ] =.05 or 5% semiannually

Annual rate = 5 *12 /6 = 10%    [since interest is paid semiannually ]

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