Question

On June​ 1, 2017, Smith​ & Beecham Services issued $ 36 comma 000 of 12​% bonds that mature in five years. They were issued at par. The bonds pay semiannual interest payments on June 30 and December 31 of each year. On December​ 31, 2017, how much interest is paid to​ bondholders?

Answer 1

Interest on 31 December 2017 = $2,160

Step-by-step explanation:

The cost of bonds = $36,000

Rate of interest on bonds = 12%

Bonds are issued at par value.

Issue date of bonds = June 1 2017

Interest is paid semiannually on June 30 and 31 Dec

Interest on 30 June 2017 =
`36,000 * (12)/(100) *(1)/(12) = 360`

Interest on 31 December 2017 =
`36,000 * (12)/(100) * (6)/(12) = 2,160`