Night Owl Distributors Ltd. was authorized to issue $500,000 of 12% bonds on January 1, 2015. On this date, the corporation issued $200,000 of bonds for $210,152. The market rate of interest was 10%. Interest is paid semi-annually on June 30 and December 31.
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Required: |
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1. |
Calculate the amount of interest paid every interest payment date. |
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2. |
Complete the amortization table below using the effective interest method of amortization. |
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3. |
Using the following table, calculate the interest percentage under the effective interest method of amortization for each six-month period. |
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4. |
Comment on the interest percentage that results in each period. Do you think that this should remain constant from period to period? Why or why not? |
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