Question

Compute the amount of Each the Interest payment.

The Bond has a Face Value of $10,000 with a 6% Face Interest Rate and the Market Rate of Interest is 10%
Interest is Paid Quarterly, every 3 months.

Answer 1

The amount of each interest payment for the bond can be calculated using the formula: Interest Payment = Face Value x Face Interest Rate x Time Period.

Step-by-step explanation:

To calculate the amount of each interest payment for the bond, we need to consider the face value, face interest rate, market interest rate, and the payment frequency. In this case, the bond has a face value of $10,000 and a face interest rate of 6%. The market interest rate is 10% and interest is paid quarterly, every 3 months.

To calculate the amount of each interest payment, we can use the following formula:

Interest Payment = Face Value x Face Interest Rate x Time Period

Since interest is paid quarterly, we need to calculate the time period as a fraction of a year. In this case, it would be 3 months divided by 12 months, which is 0.25.

Using the formula, the amount of each interest payment for this bond would be:

Interest Payment = $10,000 x 6% x 0.25 = $150