To calculate the value of each coupon of the bond we multiply the nominal value by the interest rate.
That is to say:
[tex]Coupon = Nominal value (Vn) * coupon rate (interest rate)[/tex]
[tex] Coupon = $10 000 * 0.04 = $400 [/tex]
That is the payment what to he receive annually.
After 30 years, Amanda will have received:
[tex] $400*30 = $12 000 [/tex]
Amanda purchased a 30 year $10,000 bond at par value with a 4% coupon.
We find the coupon amount each year
Coupon amount = actual amount of bond * 4%
= 10,000 * 0.04 = 400
Coupon amount for every year = 400
Total value of coupons for 30 years = 400 * 30 = 12000
$12,000 is the total value of the coupons
