Question

A company issues 9%, 7-year bonds with a par value of $260,000 on January 1 at a price of $273,732, when the market rate of interest was 8%. The bonds pay interest semiannually. The amount of each semiannual interest payment is:

Answer 1

$11,700

Step-by-step explanation:

The semi annual interest = Coupon rate × nominal value × 1/2

= 9% × $260,000 × 1/2

= $11,700

We prorated the interest into two in order to account for six months.