Able Company Issued 1 200 000 Of 9 Percent First Mortgage Bonds On January 1 201

Able Company issued $1,200,000 of 9 percent first mortgage bonds on January 1, 2011, at 102. Then bonds mature in 20 years and pay interest semiannually on January 1 and July 1. Prime Corporation purchased $800,000 of Able’s bonds from the original purchaser on December 31, 2015, for $796,000. Prime owns 60 percent of Able’s voting common stock.

Question:

The explanation provides a calculated market rate to equal 8.786%; how is this calculated from the data above? I’m trying to setup an amortization table and I cannot calculate the market rate. I need to be able to replicate this work with other data, please help.

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