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18 May, 00:08

Discount-Mart issues $10 million in bonds on January 1, 2021. The bonds have a ten-year term and pay interest semiannually on June 30 and December 31 each year. Below is a partial bond amortization schedule for the bonds?

A. 3%.

B. 4%.

C. 6%.

D. 8%.

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Answers (1)
  1. 18 May, 00:15
    0
    option C is correct

    annual rate of interest on the bonds is 6%

    Explanation:

    Given data

    issue = $10 million

    time = 10 year

    to find out

    annual rate of interest on the bonds

    solution

    we know bond issue $10 million

    so in 10 year

    issue 2 time that is june and december

    so rate will be here

    rate = ($300,000/$10,000,000) x 2 payments per year

    so rate = 6%

    hence annual rate of interest on the bonds is 6%

    option C is correct
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