Question

A company issues 9%, 20-year bonds with a par value of $750,000. The current market rate is 9%. The amount of interest owed to the bondholders for each semiannual interest payment is.

1) 0
2) 67,500
3) 33,750
4) 1,550,000
5) 750,000

Answer 1

The correct answer is option 2) $67,500.

Step-by-step explanation:

To calculate the amount of interest owed to the bondholders for each semiannual interest payment, you need to multiply the par value of the bonds by the coupon rate.

In this case, the par value is $750,000 and the coupon rate is 9%, so the interest payment would be:

$750,000 * 9% = $67,500

Therefore, the correct answer is option 2) $67,500.