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7 September, 21:29

On July 1, 2018, Electrical Services issued $ 38 comma 000 of 9 % bonds that mature in five years. The bonds were issued at a premium, for a total of $ 39 comma 710. The bonds pay semiannual interest payments on June 30 and December 31 of each year. On December 31, 2018, what is the total amount paid to bondholders?

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  1. 7 September, 21:33
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    the bondholders will receive 1,710 cash per payment.

    They receive 1,710 at june 30th

    and 1,710 at December 31th

    for a total of 3,420

    Explanation:

    38,000 bonds face value

    bonds rate: 9% annual - -> 9%/2 = 4.5% seminannual

    cash payment: 38,000 x 4.5% = 1,710 interest payable

    the bondholders will receive 1,710 cash per payment.

    the interest expense recognize by the company do not change this as this is the amount state in teh bond title.
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