On November 30,2011,Just in Thyme,Inc.issued $100,000 of 20-year,9% bonds at 100.The bonds pay interest semiannually on May 31 and November 30.How much cash will the company pay for interest on May 31,2012,the first interest payment date?
A)$2,000
B)$8,000
C)$4,000
D)$4,120

Question

Quizplus · Accepted Answer

The annual interest payment is $100,000 x 9% = $9,000.
Since the bonds pay interest semiannually, each payment will be half of the annual payment, or $4,500.
The first payment will be made on May 31, 2012, so the company will pay 6 months' worth of interest.
6 months of interest at $4,500 per year is $2,250.
Therefore, the company will pay $2,250 in cash for interest on May 31, 2012. 
The correct answer is C) $4,000, which is not one of the answer choices provided. It seems there was a mistake in calculating the interest payment. The correct calculation would be:

- Annual interest payment: $100,000 x 9% = $9,000
- Semiannual interest payment: $9,000 / 2 = $4,500
- Interest payment for 6 months: $4,500 / 2 = $2,250

Therefore, the correct answer would be:

Answer: C
 The company will pay $2,250 in cash for interest on May 31, 2012.