Question

A bond has a $13,000 face value, a 6-year maturity, and a 2.95% coupon. Find the total of the interest payments paid to the bondholder.$

Answer 1

Given:

For the annual payment:

Principal (P) = $13,000

Time, T = 1

Rate, R = 2.95% = 0.0295

Let's find the annual interest rate using the interest formula.

`\text{Interest}=P* R* T`

We have:

`\begin{gathered} \text{Interest}=13000*0.0295*1 \\ \\ \text{Interest= \$383.50} \end{gathered}`

The annual interest to be paid to the bond holder is $383.50

To find the total of the interest payments to the bond holder, multiply the annual interest by the maturity term.

We have:

Total interest = Annual interest x Maturity term

Where:

Maturity term = 6 years

Hance, we have:

Total interest = $383.50 x 6 = $2,301

Therefore, the total of the interest paymemnts paid to the bond holder is $2,301

ANSWER:

$2,301