Question

A company issues bonds at par on April 1. These 9% bonds have a par value of $100,000 and pay interest annually. April 1,is four months after the most recent interest payment date. How much total cash interest is received on April 1 by the bond issuer

Answer 1

Answer: $3000

Step-by-step explanation:

From the information given, we are told that a company issues bonds at par on April 1 and that these 9% bonds have a par value of $100,000 and pay interest annually. April 1,is four months after the most recent interest payment date.

The total cash interest that is received on April 1 by the bond issuer will be:

= $100000 × 9% × 4/12

= $100,000 x 0.09 x ⅓

= $3,000