Question

A bond has a $13,000 face value, a 9-year maturity, and a 3.05% coupon. Find the total of the interest payments paid to the bondholder

Answer 1

SOLUTION:

Step 1 :

In this question, we have that:

A bond has a $13,000 face value, a 9-year maturity, and a 3.05% coupon.

We are asked to find the total of the interest payments paid to the bondholder.

Step 2:

Now, we have that :

The annual interest on the bond is simple interest earned on the face value of the bond, therefore:

$\begin{gathered} I\text{ = P x R x T} \\ \text{where P = \ 13, 000} \\ R\text{ = 3. 5 \%} \\ T\text{ = 9 years} \end{gathered}$

Step 3:

We have that:

$\begin{gathered} I=\frac{13,\text{ 000 x 3.05 x 9}}{100}\text{ } \\ \text{ I = }\frac{356,850}{100} \\ I\text{ = \ 3568.50} \end{gathered}$

CONCLUSION:

The total of the interest of the payments