Helio Ward (HW) owns vast amounts of corporate bonds. Suppose that on June 30, 2016, HW buys $1,300,000 of Amexon bonds at a price of 103. The Amexon bonds pay cash interest semiannually on June 30 and December 31 at the annual rate of 5% and mature at the end of five years.

1. How much did HW pay to purchase the bond investment? How much will HW collect when the bond investment matures?

2. How much cash interest will HW receive each year from Amexon?

3. Will HW's annual interest revenue on the bond investment be more or less than the amount of cash interest received each year? Give your reason.

4. Compute HW's annual interest revenue on this bond investment. Use the straight-line method to amortize the premium on the investment?