Uses the effective-interest method of amortization

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1. Today Thomas deposited $130,000 in a three-year, 8% CD that compounds quarterly. What is the maturity value of the CD?

2. At the end of each quarter, you deposit $1,000 into an account that pays 12% interest compounded quarterly. How much will you have in the account in three years?

 

3. A company issued $ 100,000 5-year, 7.00% bonds and received $ 101,137 in cash. The market rate of interest when the bonds were issued was 6.5%. What is the amount of interest expense to be recorded for the first annual interest period if the company uses the effective-interest method of amortization?

Reference no: EM13788828

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