The total interest cost on forty-six (46),ten-year,6 percent,$1,000 bonds that are issued at 98 is
A)$28,520.
B)$26,680.
C)$28,060.
D)$27,600.

Question

Quizplus · Accepted Answer

The total interest cost is the face amount of the bonds multiplied by the coupon rate multiplied by the number of years to maturity. In this case, the face amount is $46,000, the coupon rate is 6%, and the number of years to maturity is 10. So, the total interest cost is $46,000 * 0.06 * 10 = $27,600.

The Total Interest Cost on Forty-Six (46),ten-Year,6 Percent,$1,000 Bonds That