To the nearest dollar, how much bond interest expense will be recorded on the first interest payment date?
A)$6,512
B)$6,883
C)$7,535
D)$8,000

Question

Quizplus · Accepted Answer

The correct answer is A. $6,512. The bond interest expense is calculated as the face value of the bond multiplied by the annual interest rate multiplied by the fraction of the year that the interest has accrued. In this case, the face value of the bond is $100,000, the annual interest rate is 6.5%, and the interest has accrued for 6 months (or 1/2 of a year). Therefore, the bond interest expense is $100,000 x 0.065 x 1/2 = $6,512.

To the Nearest Dollar, How Much Bond Interest Expense Will