Question

For a two year bond of $2,200 at a simple interest rate of 10% per year, find the semiannual interest payment and the total interest eamed over the life of the bond. The semiannual interest on the bond is $.......... (Simplify your answer. Type an integer or a decimal. Round to the nearest cent as needed.) The total interest on the bond is $............ (Simplify your answer. Type an integer or a decimal. Round to the nearest cent as needed.)

Answer 1

The semiannual interest payment is $220 and the total interest earned over the life of the bond is $880.

Step-by-step explanation:

The semiannual interest payment can be calculated using the formula:

Semiannual Interest = Principal * Rate * Time

For a two-year bond of $2,200 at a simple interest rate of 10% per year:

Semiannual Interest = $2,200 * 0.10 * (2/2)

Semiannual Interest = $220

The total interest earned over the life of the bond can be calculated by multiplying the semiannual interest by the number of periods:

Total Interest = Semiannual Interest * Number of Periods

In this case, since there are 4 periods (2 years * 2 semiannual periods),

Total Interest = $220 * 4

Total Interest = $880