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A company issues 696, 7-year bonds with a par value of $240,000 on January 1 at a price of $254,029, when the market rate of interest was 5% The bonds pay interest sem annually The amount of each sem annual terest payment is Multiple Choice $6,000 $14,400 $12,000 $7,200 $0

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Answer #1

SOLUTION

Correct option is D, i.e. $7,200

Given,

Par value = $240,000

Rate of interest = 6%

Semi-annual interest payment = (Par value * Rate of interest) / 2

= ($240,000*6%) / 2

= $14,400 / 2

= $7,200

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