How to calculate the effective interest (example for bond effective interest rate) and apply the effective interest rate to amortize a bond (could be for other types of investments as well), the effective interest rate is the rate of interest required to discount a cash flow (bond example) of future value of bond and its payments back to its present value at time its issued, once the effective interest rate is calculated it can be used to amortize the bond using the effective interest rate method, detailed example showing a cash flow diagram and using Excel IRR (internal rate of return) function to calculate the effective interest rate, using the interest rate a bond amortization schedule (how to apply effective interest rate) is shown based on the bond purchase price, face value, yeild to maturity, coupon rate and effective interest rate, complete accounting example with detailed calculations including basic journal entries for a bond amortization by Allen Mursau

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