Use the following to answer questions
Lopez Plastics Co.(LPC)issued callable bonds on January 1,2016.LPC's accountant has projected the following amortization schedule from issuance until maturity:

-What is the annual effective interest rate on the bonds?
A)3%
B)3.5%
C)6%
D)7%

Question

Use the following to answer questions 
Lopez Plastics Co.(LPC)issued callable bonds on January 1,2016.LPC's accountant has projected the following amortization schedule from issuance until maturity:
 
-What is the annual effective interest rate on the bonds?
A)3% 
B)3.5% 
C)6% 
D)7%

Quizplus · Accepted Answer

The annual effective interest rate is the rate that would give the same present value as the sum of all the payments discounted at that rate. Using a financial calculator or Excel, the annual effective interest rate can be calculated as 6%.

Use the Following to Answer Questions