On April 1, 2018, Ellucian Corporation invested in the bonds issued by the City of Westminster on January 1, 2018. These 10-year, $600,000 bonds pay interest of 2% with semiannual payments every June 30 and December 31. Ellucian paid par value plus accrued interest. Ellucian's fiscal year ends on December 31. What is Ellucian's net interest revenue for 2018?

Question

Quizplus · Accepted Answer

Ellucian receives two interest payments in 2018: $6,000 on June 30 and $6,000 on December 31, totaling $12,000. However, since Ellucian paid accrued interest for the period from January 1 to March 31, which is $3,000, the net interest revenue for 2018 is $12,000 - $3,000 = $9,000.

On April 1, 2018, Ellucian Corporation Invested in the Bonds