Respuesta :
Answer:
$4,418.23
Explanation:
The effective interest rate method applies to financial assets or financial assets held at amlortised cost.
The amortised cost of a financial instruments is the initial cost of the instrument plus or minus the amortisation of the difference between the initial amount and the repayment amount over the life of the instrument using the effective interest rate.
The effective interest rate is the internal rate of retruns of an instrument.
The interest (finance cost) on a financial liability held at amortised is the effective interest rate applied on the oustanding amount (which may be different from the nominal principal).
In the case of the the financial liability above, the nominal interest is 8.5% per annum while the effective interest is 9% per annum. The six months rates on which the amortisation is based upon is nominal 4.25% (8.5%/2) and effective 4.5% (9%/2).
While the nominal interest reduces the outstanding liability, the effective interest increases it as follows:
$
Net proceeds 98,021.82
Nominal int (8.5%/2 x $100,000) (4,250.00)
Eff Int (9%/2 x $98,021.82) 4,410.98
Book value after 1st six months 98,182.80
Nominal int (8.5%/2 x $100,000) (4,250.00)
Eff Int (9%/2 x $98,182.80) 4,418.23
Book value after 2nd six months 98,351.03
