Question

On July​ 1, 2018, Electrical Services issued $ 38 comma 000 of 9​% bonds that mature in five years. The bonds were issued at a​ premium, for a total of $ 39 comma 710. The bonds pay semiannual interest payments on June 30 and December 31 of each year. On December​ 31, 2018, what is the total amount paid to​ bondholders?

Answer 1

the bondholders will receive 1,710 cash per payment.

They receive 1,710 at june 30th

and 1,710 at December 31th

for a total of 3,420

Step-by-step explanation:

38,000 bonds face value

bonds rate: 9% annual --> 9%/2 = 4.5% seminannual

cash payment: 38,000 x 4.5% = 1,710 interest payable

the bondholders will receive 1,710 cash per payment.

the interest expense recognize by the company do not change this as this is the amount state in teh bond title.