Here is a practice question that I’m currently studying, and for some reason I’m just not getting it. I would be greatly appreciative to anyone who is willing to help me out a little. Here’s the question:
Determine the present value of a five-year, $10,000, 6 per cent bond, which sold for a yield of 8 per cent (the effective interest rate). Interest is paid annually. Complete the table to show the liability of the bond issued, amortization of premium or discount, the interest expense each year, and the payment of the interest and principal.
I actually only need help with the “Interest rate per period” and the “Amortization of the premium.” Any help would be awesome from my fellow Jellies.
This question is in the General Section. Responses must be helpful and on-topic.