What is the effective annual interest rate on the bonds

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Question - Chess Corporation issued $800,00 of bonds on January 1, 2018. They have an 8-year term and pay interest semiannually on June 30 and December 31 of each year. This is the partial bond amortization schedule for the bonds.

Date

Cash Interest

Effective Interest

Increase in balance

Outstanding Balance

1/1/2018




710,129

6/30/2018

28,000

31,956

3,956

714,084

12/31/2018

28,000

32,134

4,134

718,218

6/30/2019

28,000




12/31/2019

28,000




Required - What is the effective annual interest rate on the bonds?

Reference no: EM133186739

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