Cindy Corp Sold $400,000 of Three-Year Bonds for $300,500

question 74

Multiple Choice

Cindy Corp sold $400,000 of three-year bonds for $300,500.Interest is of 7.5% is payable annually.What is the effective rate of interest (round to 2 decimal places) ?

• A)19.15%
• B)14.57%
• C)13.88%
• D)7.50%

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Definitions:

Discounted Note

A financial instrument involving a loan document that has been reduced from its face value to reflect current market interest rates.

Journal Entry

A record of a business transaction in an accounting journal that details the financial implications of the transaction.

Note Payable

A written promise to pay a certain amount of money, usually with interest, at a future date or on demand.

Due Date

The specified date by which a task needs to be completed or a payment needs to be made.