Question

The Lakeside Company issues​ $518,000 of its​ 10%, 10-year bonds at 106 on March​ 31, 2019. The bonds pay interest on March 31 and September 30. On September​ 30, 2019, how much cash did the company pay to the​ bondholders?

Answer 1

company pay to the​ bondholders of $ 25,900

Step-by-step explanation:

Face value of the bond = $ 518,000

Interest Rate per annum = 10 percent

Interest Rate for Semi annum = 5 percent [ 10%/2]

Cash interest paid = Face value * Coupon Rate

= $518,000 * 5%

= $ 25,900

Cash interest Paid on September 30,2019,is : $ 25,900

Answer 2

$25,900

Step-by-step explanation:

As for the provided details, we have

Face value of the bonds issued by Lakeside Company = $518,000

Coupon rate = 10%
`*` 6/12 = 5%

Term = 10 years paid half yearly = 10
`*` 2 = 20 periods

Dates on which coupons will be paid = March 31 and September 30

Coupon on September 30 = $518,000
`*` 5% = $25,900

This the amount of cash paid on 30 September 2019 to bond holders = $25,900