In 2010,Hopkins Corporation issued ten-year,10 percent bonds when the market interest rate was 12 percent.Interest is payable annually.During 2013,the market rate of interest for similar bonds was 14 percent.Using the effective interest method of amortization,what interest rate will be used to calculate interest expense for 2013?

Question

Quizplus · Accepted Answer

The effective interest method uses the market interest rate at the time of issuance to calculate interest expense, which was 12 percent in 2010.

In 2010,Hopkins Corporation Issued Ten-Year,10 Percent Bonds When the Market