At the beginning of 2009, Little Company bought a bond with a $18 million face value...
At the beginning of 2009, Little Company bought a bond with a $18 million face value and an annual coupon rate of 7.4%. It has a maturity of 12 years. How much total interest income has Little Company received through the end of 2014 (cumulatively) if interest is paid semiannually?
Homework Answers
Interest is paid on the face value of bonds
Number of years = 6
Total Interest earned by end of 2014 = Par value*Interest rate*Number of Years
= 18,000,000*7.4%*6
= $7,992,000
i.e. 7.992 million
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