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What was the effective yield on the bonds

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On January 1, 2017, Hoist Up Company (HUC), purchased bonds of Southern Inc. that had the following characteristics: 12% coupon rate, $300,000 face value, maturing on December 31, 2021, and interest paid annually on December 31. The bonds were purchased by HUC for $322,744.72.

The fair value of the bonds at December 31, 2017 was $320,500. The fair value of the bonds at December 31, 2018 was $308,900. The bonds are not considered to be impaired.

Problem 1: What was the effective yield on these bonds?

Reference no: EM132610644

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