Morgan company issues 10%, 20-year bonds with a par value of $790,000 that pay interest semiannually. the current market rate is 9%. the amount paid to the bondholders for each semiannual interest payment is:

Question

Nickolas Church

Business

13 January, 17:04

Morgan company issues 10%, 20-year bonds with a par value of $790,000 that pay interest semiannually. the current market rate is 9%. the amount paid to the bondholders for each semiannual interest payment is:

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Bernie · Answer 1

A bond has three important components namely; face value, interest rate and time. Multiply these three parts then you’ll get the bond.

Given:

Face value of $790,000

Interest rate of 10%

Time which is semiannually

Formula: FV x interest x time = bond

$790,000 x 0.10 x 0.50 = $39,500

The amount paid to the bondholders for each semiannual interest payment is $39,500