On SEPTEMBER 30,2011,Ace Electronics issued $100,000 of 10-year,8% bonds at 100.The bonds pay interest semiannually on September 30 and March 31.How much cash will the company pay for interest on March 31,2012,the first interest payment date?
A)$2,000
B)$8,000
C)$4,000
D)$4,120

Question

On SEPTEMBER  30,2011,Ace Electronics issued $100,000 of 10-year,8% bonds at 100.The bonds pay interest semiannually on September 30 and March 31.How much cash will the company pay for interest on March 31,2012,the first interest payment date?
A)$2,000
B)$8,000
C)$4,000
D)$4,120

Quizplus · Accepted Answer

The semiannual interest payment is calculated as $100,000 x 8% x 6/12 = $4,000. This is the amount that Ace Electronics will pay for interest on March 31, 2012. Therefore, the correct answer is C.

On SEPTEMBER 30,2011,Ace Electronics Issued $100,000 of 10-Year,8% Bonds