On January 2, 2016, Hi-Tech Master Construction, Inc.issued $500,000, 10-year bonds for $574,540.The bonds pay interest on June 30 and December 31.The face rate is 8% and the market rate is 6%.The annual cash payment (paid in semiannual payments) on the bonds is

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The annual cash payment for the bonds is calculated based on the face value and the face rate. Since the face value is $500,000 and the face rate is 8%, the annual cash payment is 8% of $500,000, which equals $40,000. This payment is typically split into semiannual payments, but the question asks for the annual cash payment amount.