Question

Atom Endeavour Co. issued $39 million face amount of 8.1% bonds when market interest rates were 8.03% for bonds of similar risk and other characteristics. Required: a. How much interest will be paid annually on these bonds

Answer 1

Answer: $3,159,000

Explanation:

Based on the information provided, the amount of interest that will be paid annually on these bonds will be calculated as follows:

Interest = Coupon rate × Face value

where,

Coupon rate = 8.1%

Face value = $39 million

Interest = Coupon rate × Face value

= 8.1% × $39 million

= 0.081 × $39 million

= $3,159,000

Therefore, the interest amount is $3,159,000.