Answer:
$30,800
Explanation:
To calculate the interest payment for a semiannually bond we will use yield. The market rate of interest is not used to calculate the interest payment.
The interest payment for Morgan Company will be calculated using formula below,
Face value of Bond * Yield interest rate * 1/2
$770,000 * 8% * 1/2 = $30,800
The Morgan Company will pay $30,800 to both holders semiannually as an interest payment.
Answer:
$30,800
Explanation:
Morgan Company:
Interest Yield Rate = 8% = 0.08
Time = 1/2 = 0.5
Par Value of Bond = $770,000
The amount paid to the bondholders for each semiannual interest payment can be calculated as follows:
Interest Yield Rate x Time x Par Value of Bond
0.08 x 0.5 x $770,000
$30,800
The current market rate has no impact on interest payment.
