Question

What is the semiannual interest payments of a 30 year bond with a face value of $50 million and a stated annual interest rate of 4 percent?

Answer 1

Based on the stated annual interest rate and the face value of the bond, the semiannual payments will be $1,000,000.

How can the semiannual interest payment be found?

The formula to find the semiannual payment is:

= (Face value x Stated annual interest rate) / 2 semi-annual periods per year

Solving gives:

= (50,000,000 x 4%) / 2

= 2,000,000 / 2

= $1,000,000

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