Question

A corporation issues for cash $9,000,000 of 8%, 30-year bonds, interest payable semiannually. The amount received for the bonds will be

a.present value of 30 annual interest payments of $720,000
b.present value of 60 semiannual interest payments of $360,000, plus present value of $9,000,000 to be repaid in 30 years
c.present value of $9,000,000 to be repaid in 30 years, less present value of 60 semiannual interest payments of $360,000
d.present value of 30 annual interest payments of $360,000, plus present value of $9,000,000 to be repaid in 30 years

Answer 1

B

Step-by-step explanation:

- The Semiannually total interest Payable will be calculate as

30*2 = 60 Semiannual Times Payments

- Interest Payments

$9,000,000*8%/2=$360,000

- So the Total payments will be paid semiannually 60 times $360,000 with the principle amount $9,000,000