On 1 January 2014, Davie Services issued $20 000 of 8% debentures that mature in five years. They were sold at a premium, for a total of $20 750. The debentures pay half- yearly interest payments on 30 June and 31 December of each year. On 30 June 2014, how much is the total amount paid to debenture holders?
A)$800.00
B)$830.00
C)$1 660.00
D)$276.67

Question

Quizplus · Accepted Answer

The total amount paid to debenture holders on 30 June 2014 is the interest payment for half a year. The annual interest is 8% of $20,000, which is $1,600. Therefore, the half-yearly interest payment is $800.00.

On 1 January 2014, Davie Services Issued $20 000 of 8