Answer:
Semi-annual interest =$11,700
Explanation:
The semi annual interest = coupon rate × nominal value× 1/2
= 9% × 260,000× 1/2
=$11,700
The interest has to be pro rated into two to account for 6 months
Answer:
$11,700
Explanation:
The amount of each semi-annual payment is ascertained by multiplying the coupon rate of 9% with face value of the bond which is $260,000 while adjusting the interest payment to reflect a six month interest payment by multiplying by six months and dividing by 12 months as set out below:
Semi-annual interest payment=$260,000*9%*6/12
=$260,000*0.09*0.5=$11,700
The company would have to pay the bondholders the sum of $11,700 every six months throughout the duration of the bond
