Question

Bond interest payments before and after taxes Charter Corp. has issued 2 comma 626 debentures with a total principal value of ​$2 comma 626 comma 000. The bonds have a coupon interest rate of 5​%. a. What dollar amount of interest per bond can an investor expect to receive each year from​ Charter?

Answer 1

$50

Step-by-step explanation:

Given that

Debentures = 2626

Principal value = 2,626,000

Coupon interest = 5%

Recall that

Dollar amount of interest per bond = bond face value × coupon rate

Since face value = 1000

Therefore

= 1000 × 5%

= 1000 × 0.05

= $50

Answer 2

$100

Step-by-step explanation:

Given:

• The bonds have a coupon interest rate of 5​%
• Issued 2 comma 626 debentures
• Total principal value of ​$2

So dollar amount of interest per bond can an investor expect to receive each year from​ Charter is:

Bond face value × Coupon rate

= $2000* 5%

= $100