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17 March, 08:28

Three years ago you purchased a Kraft Heinz corporate bond that pays 4.498 percent annual interest. The face value of the bond is $1,000. What is the total dollar amount of interest that you received from your bond investment over the three-year period? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

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  1. 17 March, 09:14
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    The dollar amount of interest that is receivable from the bond is $134.94

    Explanation:

    The amount of coupon interest receivable over a three year period can be computed as shown below

    Annual coupon interest=face value of the bond*annual coupon rate

    face value of the bond is $1000

    annual coupon rate is 4.498%

    annual coupon interest=$1000*4.498%=$44.98

    Three-year dollar amount of interest=annual coupon interest*3 years

    Three-year dollar amount of interest=$44.98*3

    Three-year dollar amount of interest=$134.94

    the three year dollar interest represents 13.49% return on the bond ($134.94/$1000)
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