Question

On July​ 1, 2018, Mason​ & Beech Services issued $ 44 comma 000 of 11​% bonds that mature in five years. They were issued at par. The bonds pay semiannual interest payments on June 30 and December 31 of each year. On December​ 31, 2018, what is the total amount paid to​ bondholders?

Answer 1

The total amount paid to​ bondholders is $2,420.

Step-by-step explanation:

Bonds are long-term liability or debt, usually issued at face value, discount or premium.

The total amount paid to bondholders on December​ 31, 2018 will be the semiannual interest payments, calculated as follows: Face value of the bond x Period interest rate (semi-annual).

Total payment: $44,000 x 11% / 2 = $2,420