Assume that National, Inc. issues $100,000 of 8% bonds on January 1, 2020. The bonds are...

Assume that National, Inc. issues $100,000 of 8% bonds on January 1, 2020. The bonds are due in five years, with interest payable annually. What will the purchaser of the bonds receive?

:

A: six $8,000 interest payments, plus the $100,000 principal at maturity
B : five $8,000 interest payments, plus the $100,000 principal at maturity
C : five equal payments of $108,000
D : five increasing payments based on principal plus interest

Expert Solution

The purchaser of the bond will receive:

B: five $8,000 interest payments, plus the $100,000 principal at maturity.

Note: Annual interest that will be receivable at the end of every year till maturity will be = $8000 (i.e. $100,000 x 8%) and the face value of the bond i.e. $100,000.

ekkarill92 answered 2 years ago

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