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A company issues 7% bonds with a par value of $200,000 at par on January 1. The market rate on the date of issuance was 6%. The bonds pay interest semiannually on January 1 and July 1. The cash paid on July 1 to the bond holder(s) is:

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Answer:

The cash  paid to the bondholder on July 1 is    Z =  $7000

Step-by-step explanation:

From the question we are told that

  The percentage bond issued by the company is [tex]n = 7[/tex]%

    The par value of the bond is [tex]V =[/tex]$200,000

     The market rate is [tex]r = 6[/tex]%

So we are told that the bonds pay interest semiannually on January 1 and July

So the cash  paid to the bondholder on July 1 is mathematically evaluated as

Z =  [tex]V * \frac{7}{100} * \frac{1}{2}[/tex]        

substituting value

   Z =  [tex]200000 * \frac{7}{100} * \frac{1}{2}[/tex]  

      Z =  $7000