Use the Following Information for Questions 46 Through 48

question 73

Multiple Choice

Use the following information for questions 46 through 48.
Chang Corporation issued $4,000,000 of 9%, ten-year convertible bonds on July 1, 2014 at 96.1 plus accrued interest. The bonds were dated April 1, 2014 with interest payable April 1 and October 1. Bond discount is amortized semiannually on a straight-line basis. On April 1, 2015, $800,000 of these bonds were converted into 500 shares of $20 par value common stock. Accrued interest was paid in cash at the time of conversion.
-What was the effective interest rate on the bonds when they were issued?

• A) 9%
• B) Above 9%
• C) Below 9%
• D) Cannot determine from the information given.

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Definitions:

Glycolysis

The metabolic pathway that converts glucose into pyruvate, generating ATP and NADH without the need for oxygen.

NADH

A coenzyme found in all living cells that is produced during glycolysis and used as an electron carrier in the process of cellular respiration.

FADH2

A redox cofactor involved in cellular respiration, acting as a carrier of electrons to the electron transport chain.

Alcoholic Fermentation

A biological process by which sugars such as glucose, fructose, and sucrose are converted by yeast or bacteria into cellular energy, producing ethanol and carbon dioxide as side products.