On January 1, 2021, $ 1,000,000, 5-year, 5% bonds, were issued for $ 957,349. The interest rate in effect when the bonds were issued was 6%. Interest is paid semi-annually on January 1 and July 1. How much interest is paid at each interest payment date?

Question

Quizplus · Accepted Answer

The correct answer is A because the interest paid at each interest payment date is $25,000. This is calculated by taking the face value of the bonds ($1,000,000) and multiplying it by the annual interest rate (5%) and dividing by 2 (since interest is paid semi-annually).

On January 1, 2021, $ 1,000,000, 5-Year, 5% Bonds, Were