On April 15,2017,Cando Inc.sold $10,000,000 of five-year,3% bonds for $9,972,469. From the proceeds,Cando paid its investment bank a $200,000 sales commission.
Interest is payable semi-annually on April 15 and October 15.What is the effective rate of interest (round to 2 decimal places)?

Question

Quizplus · Accepted Answer

B) The net proceeds (PV) to Cando are $9,772,469 ($9,972,469 - $200,000); N = 10 (5 × 2); PMT = $150,000 ($10,000,000 × 3% × 6/12)
10 N, 9772469 +/- PV, 10000000 FV, 150000 PMT, CPT I/Y I/Y = 1.75%