On January 2, 2015, 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

Question

Quizplus · Accepted Answer

The annual cash payment is calculated using the face rate of 8% on the $500,000 bond. The annual interest is $500,000 * 8% = $40,000, paid in two semiannual payments of $20,000 each.