The cash paid on july 1 to the bond holder(s) is: $4500
On January 1st, the business issues 6% bonds with a $150,000 par value at par. On the date of issuance, the market rate was 5%.
The corporation issues $80,000 par value, 6% interest-bearing bonds with interest due every two years. A bond is a debt security that resembles an IOU. Borrowers create bonds to get money from investors who are willing to lend to them for a set length of time. Lending money to the issuer, which could be a business, government agency, or both, is required to buy a bond.
We'll start by figuring out the bonds' annual interest accumulation.
$15000 * 6% = $9000
To determine the interest paid every two years,
$9000/ 2 = $4500
On July 1, $4500 was paid in cash to the bond holder or holders.
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