Bateman Enterprises invested in the bonds of Greater Gloucester on January 1, 2018. These 10-year, $300,000 bonds pay interest of 3% with semiannual payments every June 30 and December 31. The effective rate of interest for similar bonds on January 1 was 4%. What is the semi-annual interest payment received by Bateman for these bonds?

Question

Quizplus · Accepted Answer

The semi-annual interest payment is calculated as the face value of the bonds multiplied by the nominal interest rate divided by two (since payments are semiannual). Thus, $300,000 * 3% / 2 = $4,500.

Bateman Enterprises Invested in the Bonds of Greater Gloucester on January