Answer:
$60
Explanation:
Calculation of the annual interest payment on a $1,000 face value bond for Alfa Co.
Since Alfa Co. already has 6% coupon bond outstanding which pays annual interest, therefore to calculate for the annual interest payment on a $1,000 face value bond what we are going to do is to find the 6% of the $1,000 face value using this formula
Annual Interest payment= Percentage of coupon bond outstanding × Amount of the face value bond
Where,
Percentage of coupon bond outstanding =6%
Amount of the face value bond =$1,000
Let plug in the formula
Annual Interest payment=6%*$1,000=$60
Therefore the annual interest payment on a $1,000 face value bond for Alfa Co. will be $60
