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13 August, 06:19

A bond with a face value of $100,000 was issued for $93,500 on January 1 of this year. The stated rate of interest was 8 percent and the market rate of interest was 10 percent when the bond was sold. Interest is paid annually. How much interest will be paid on December 31 of this year?

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  1. 13 August, 10:09
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    So interest payment will be $8000

    Explanation:

    We have given face value of the bond = $100000

    And bond is issued for $93500

    Standard rate of interest = 8 %

    And market rate of interest = 10 %

    We have to find the interest paid

    Interest payment will be given by

    Interest payment = face value of bond * standard rate of interest

    = $100000*0.08 = $8000

    So interest payment will be $8000
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