Question

Bonds in the amount of $100,000 and a life of 10 years were issued by the Focus Company. If the face rate is 6% and interest is paid semiannually, what would be the total amount of interest paid over the life of the bonds?

a. $30,000
b. $60,000
c. $6,000
d. $120,000

Answer 1

The total amount of interest paid over the life of the bonds is $120,000.

Step-by-step explanation:

The total amount of interest paid over the life of the bonds can be calculated using the formula:

Total Interest = Face Value * Interest Rate * Number of Periods

In this case, the face value of the bonds is $100,000, the interest rate is 6%, and the life of the bonds is 10 years, with interest paid semiannually. So, the total amount of interest paid over the life of the bonds would be:

Total Interest = $100,000 * 0.06 * 20 = $120,000

Therefore, the correct answer is d. $120,000.