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    Calculate the bond discount at issuance- Luba Corporation

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    On January 1, 2005, when the market interest rate was 14%, Luba Corporation issued bonds in the face amount of $500,000, with interest at 12% payable semiannually. The bonds mature on December 31, 2014.

    Required

    Calculate the bond discount at issuance. How much of the discount should be amortized by the effective interest method on July 1, 2005?

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    https://brainmass.com/business/accounting/calculate-bond-discount-issuance-luba-corporation-81931

    Solution Preview

    FV = 500,000
    N = 10*2 = 20
    payment each period = 500,000 * 12%/2 = 30,000
    yield rate = 14%/2 = 7%
    Then using a financial calculator, or EXCEL ...

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