TMC issued $50 million of its 12% bonds on April 1, 2009, at 98 plus accrued interest. The bonds are dated January 1, 2009, and mature on December 31, 2030. Interest is payable semiannually on June 30 and December 31. What amount did TMC receive from the bond issuance?
A)$50.5 million
B)$51.5 million
C)$49.0 million
D)$49.5 million $50 million .98 = $49 million
12% $50 million 3/12 = $1.5 million
$49 million + 1.5 Million = $50.5 million

Question

Quizplus · Accepted Answer

TMC received $49 million from the bond issuance (50 million x 0.98). The accrued interest was not included in the bond price and will be paid separately. The semi-annual interest payment due on June 30, 2009, is $1.5 million (12% x $50 million x 3/12). Adding the accrued interest to the bond price gives us the total amount TMC received, which is $50.5 million. Therefore, the correct answer is A.

TMC Issued $50 Million of Its 12% Bonds on April