Morgan Company issues 9%, 20-year bonds with a par value of $750,000 that pay interest semiannually. The amount paid to the bondholders

Morgan Company issues 9%, 20-year bonds with a par value of $750,000 that pay interest semiannually. The amount paid to the bondholders for each semiannual interest payment is.

Answers

$33,750

Explanation:

Given that

Bond per share = $750,000

Issued Amount = 9%

The computation of amount which is to be paid to the bondholders for every semi-annual interest payment is given below :-

Interest payment = bond per share × issued amount × (number of months ÷ total number of months in a year)

= $750,000 × 9% × 6 months ÷ 12 months

= $33,750

Calculation of the amount paid to the bondholders for each semiannual interest payment:

Formula used:

Semiannual interest payment = Bond's Face value * Bond's Interest rate / 2

We know the following information:

Bond's Face value = $750,000

Bond's Interest rate = 9%

Hence, Semiannual interest payment = 750000*9%/2 = $33,750

$33750

Explanation:

First and foremost, we have to calculate the interest paid for the year which will be:

= $750000 X 9%

= $750000 × 0.09

= $ 67500

Therefore, the semi annual payment will them be calculated as:

= $67500 / 2

= $33750

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Posts