McLennan Corporation issued 250000 of 65 10year bonds The bo

McLennan Corporation issued $250,000 of 6.5%, 10-year bonds. The bonds are dated and sold on January 1, 2016. Interest payment dates are January 1 and July 1. The bonds are issued for $241,117 to yield the market interest rate of 7% Using the effective-interest method, what is the total cash payment for interest for each 12-month period? (All amounts are rounded to the nearest dollar.) OA. $17,500 B. $15,673 O C. $16,250 O D. $16,878

Solution

Answer: Option [C} Calculation: The cash payment = 250000*6.5% = $         16,250