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Homework Help: Need help on this

  1. Sep 9, 2004 #1
    need help on this!!

    I think that some type of simple interest formulat has to be used to figure this one out. But I'm no sure, can someone assist me with this? thanks!!!

    Shaid Coporation issued $2000000 of 6%, 10-year convertible bonds on June 1, 1993, at 98 plus accrued interest. The bonds wer date April 1, 1993, with interest payable April 1 and October 1. Bond discount is amortized semiannually on a straight-line basis. On April 1, 1994, 4500,000 of these bonds were converted into 500 shares of $20 par value comon stock. Accrued interest was paid in cash at the time of conversion. What was the effective interest rate on the bonds when they were issued?

    (a) 6%
    (b) Above 6%
    (c) Below 6%
    (c) Cannot be determined from the information given.
  2. jcsd
  3. Sep 14, 2004 #2


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