Question

Morgan Company issues 10%, 20-year bonds with a par value of $720,000 that pay interest semiannually. The current market rate is 9%. The amount paid to the bondholders for each semiannual interest payment is:

Answer 1

Answer:

$36,000

Explanation:

Calculation for the amount to be paid to the bondholders for each semiannual interest payment

Using this formula

Semiannual interest payment = Face value Amount*Interest Rate*Time

Let plug in the formula

Semiannual interest payment = $720,000*0.10*0.50

Semiannual interest payment = $36,000

The amount paid to the bondholders for each semiannual interest payment is $36,000