On January 1 a company issues a $75,000 bond that pays interest semi-annually. The first interest payment of $1,875 is paid on July 1. What is the stated annual interest rate on the bond?
On October 1 a company sells a 3-year, $2,500,000 bond with an 8% stated interest rate. Interest is paid quarterly and the bond is sold at 89.35. On October 1 the company would collect ________.
| Bond value | $ 75,000 |
| Semi-annually interest | $ 1,875 |
| Interest rate $1,875/75,000*2 | 5% |
Answer is A. 5%
2.
| Face value of bond | $ 2,500,000 |
| Number of bonds issued ($2,500,000/100) | 25,000 |
| Selling price per bond | $ 89.35 |
| On October 1 the company would collect ($89.35*25,000) | $ 2,233,750 |
Answer is G $2,233,750
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