Lopez Plastics Co. (LPC) issued callable bonds on January 1, 2016. LPC\'s accoun
ID: 2590397 • Letter: L
Question
Lopez Plastics Co. (LPC) issued callable bonds on January 1, 2016. LPC's accountant has projected the following amortization schedule from issuance until maturity: Effective Outstanding Cash interest Decrease in balance Date interest balance S207,020 206,230 205,417 204,580 203,717 202,829 201,913 200,971 200,000 1/1/2016 $789 813 837 863 6/30/2016 $7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 S6,211 6,187 6,163 6,137 6,112 6,085 6,057 6,029 12/31/2016 6/30/2017 12/31/2017 6/30/2018 915 943 971 12/31/2018 6/30/2019 1231/2019 What is the annual stated interest rate on the bonds? 6% 35% None of the answer choices is correct. 7%Explanation / Answer
Ans : 6%,
Balance on 1/1/2016 :$207,020
Interest at the end of 6 months = $6,211
Interest Rate = $6211/$207,020*100
Interest rate for 6 months = 3%
If we multiply wiith 2 we will get annual interest =6%
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