Question: QUESTION: A bond with a 800,000-peso face value has a 4% coupon and a 5-year maturity date. Calculate the total of the interest payments paid

QUESTION: A bond with a 800,000-peso face value has a 4% coupon and a 5-year maturity date. Calculate the total of the interest payments paid to the bondholder.

Example: A bond with a 500,000-peso face value has a 3% coupon and a 5-year maturity date. Calculate the total of the interest payments paid to the bondholder. Solution: Use the simple interest formula to nd the annual interest payments. Substitute the following values into the formula: P = 500,000, r = 0.03, and t = 1. I = Prt = 500, 000(0.03)(1) = 15,000 pesos Multiply the annual interest payment by the term of the bond (5 years). 15,000 x 5 = 75,000 pesos The total of the interest payments paid to the bondholder is 75,000 pesos

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