Bonds rm 50 millions
Issue bond with selling price of rm 1250 @ 16% interest annually . The bond will mature in 20 years and the issuance cost is rm 50
To calculate the total amount of money received from issuing the bond, you need to multiply the selling price of each bond by the number of bonds issued.
1. Calculate the number of bonds issued:
Divide the total value of the bonds (RM 50 million) by the selling price of each bond (RM 1250).
Number of bonds issued = RM 50,000,000 / RM 1,250 = 40,000
2. Calculate the total amount of money received:
Multiply the number of bonds issued (40,000) by the selling price of each bond (RM 1250).
Total amount received = 40,000 bonds * RM 1,250/bond = RM 50,000,000
So, the total amount received from issuing the bonds is RM 50 million.
Now, let's calculate the annual interest payment that the bondholders will receive.
3. Calculate the annual interest payment:
Multiply the total amount received (RM 50 million) by the annual interest rate (16%).
Annual interest payment = RM 50,000,000 * 0.16 = RM 8,000,000
Therefore, the bondholders will receive an annual interest payment of RM 8 million.
Lastly, let's calculate the issuance cost of the bonds, which is given as RM 50.
4. The issuance cost is RM 50.
To summarize:
- The total amount received from issuing the bonds is RM 50 million.
- The bondholders will receive an annual interest payment of RM 8 million.
- The issuance cost of the bonds is RM 50.