Problem

A bond with a face value of $100,000 was issued for $593,500 on January 1, 2011. The state...

A bond with a face value of $100,000 was issued for $593,500 on January 1, 2011. The stated rate of interest was 8 percent and the market rate of interest was 10 percent when the bond was sold. Interest is paid annually. How much interest will be paid on December 31, 2011 ?

a. $10,000

b. $8,000

c. $7,480

d. $9,350

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