On March 15, a 20-year, $5000 par value bond series with annual interest of 9 percent was issued. Three thousand of these bonds were issued at a price of 98. Interest is paid semiannually.
the subject is in accounting
To calculate the interest received from these bonds, we need to consider the annual interest rate, the par value, and the number of bonds issued.
First, let's calculate the annual interest payment:
Annual interest payment = Par value × Annual interest rate
= $5000 × 9% (0.09)
= $450
Since the interest is paid semiannually, the interest payment every six months would be half of the annual interest payment. Therefore,
Semiannual interest payment = Annual interest payment ÷ 2
= $450 ÷ 2
= $225
Now, let's calculate the total interest received from the 3000 bonds:
Total interest received = Semiannual interest payment × Number of bonds
= $225 × 3000
= $675,000
So, the total interest received from the issuance of these bonds is $675,000.