A company lssues 9 5year bonds with a par value of 250000 on

A company lssues 9%, 5-year bonds with a par value of $250,000 on January 1 at a price of $260139, when the market rate of interest was 8% The bonds pay interest semiannually The amount of each semianual interest payment Multiple Choice $22 500 o$20,000 510,000 K L s D N M

Solution

ANSWER = D) $11,250

Par Value of bond = $ 250000

Coupon rate = 9%, Semi-annual = 4.5%

Amount of Each semi-annual interest payment = Par value * Coupon rate

= $ 250000 * 4.5 %

= 11250

ANSWER = D) $11,250