Lopez Plastics Co. (LPC) issued callable bonds on January 1, 2018. LPC's accountant has projected the following amortization schedule from issuance until maturity:
Date Cash
interest Effective
interest Decrease in
balance Outstanding
balance
1/1/2018 $ 207,020
6/30/2018 $ 7,000 $ 6,211 $ 789 206,230
12/31/2018 7,000 6,187 813 205,417
6/30/2019 7,000 6,163 837 204,580
12/31/2019 7,000 6,137 863 203,717
6/30/2020 7,000 6,112 888 202,829
12/31/2020 7,000 6,085 915 201,913
6/30/2021 7,000 6,057 943 200,971
12/31/2021 7,000 6,029 971 200,000
What is the annual stated interest rate on the bonds?
a. 6%
b. None of the answer choices is correct.
c. 3.5%
d. 7%
Answers: 3
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Lopez Plastics Co. (LPC) issued callable bonds on January 1, 2018. LPC's accountant has projected th...
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