On April 1, Braintree Corporation issued 10%, 10-year, $800,000 bonds at 110. Interest dates are April 1 and October 1. The amount of cash paid out for interest during the current calendar year is:

Question

Quizplus · Accepted Answer

The bonds have a face value of $800,000 and an annual interest rate of 10%, so the annual interest payment is $800,000 * 10% = $80,000. Since interest is paid semi-annually (April 1 and October 1), the amount of cash paid out for interest during the current calendar year is $80,000.

On April 1, Braintree Corporation Issued 10%, 10-Year, $800,000 Bonds