4. On 1 January 20X8, a borrower arranged a $1,490,000 three-year 2% bond payable, with...
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Accounting
4. On 1 January 20X8, a borrower arranged a $1,490,000 three-year 2% bond payable, with interest paid annually each 31 December. There was an upfront fee of $159,311, which was deducted from the cash proceeds of the loan on 1 January 20X8.
Required:
a) Calculate the effective interest rate associated with the loan.
b) What net amount is received on 1 January 20X8?
c) Calculate the interest expense reported by the borrower for each year.
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