Homework Answers
| a. Annual interest Payment = Face Value X Coupon Interest Rate |
| $1 Million X 8%= 0.08 Million or $80000 |
| b. The bond were issued at discount because Market Interest are higher than Coupon interest rate of Bond |
| c. Annual Interest Expense on these bond will be more than the amount of Interest paid each year because market interest rate is higher than coupon interest rate |
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On July 1, 2019, $10 million face amount of 8%, 12-year bonds were issued. The bonds...
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On July 1, 2019, $4.5 million face amount of 7%, 10-year bonds were issued. The bonds pay interest on an annual basis on June 30 each year. The market interest rates were slightly higher than 7% when the bonds were sold. Required: a. How much interest will be paid annually on these bonds? (Enter your answer in whole dollar, not in millions) b. Were the bonds issued at a premium or discount? c. Will the annual interest expense on these...
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