Question

How much interest would be reported annually on a $2,000,000 face (par) value, 6% annual interest, 20-year bond?

a. $ 12,000
b. $ 6,000
c. $ 33,333
d. $ 60,000
e. $ 120,000

Answer 1

The annual interest on a $2,000,000 face value bond with a 6% interest rate is $120,000.

Step-by-step explanation:

The question posed is about calculating the annual interest on a bond. Given a $2,000,000 bond with a 6% annual interest rate, the annual interest can be calculated by multiplying the face (par) value of the bond by the interest rate. So, the calculation would look like this: $2,000,000 × 0.06 = $120,000. Therefore, the answer is $120,000 of interest reported annually on the bond.