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Suppose Mike corporation buys $1,000,000 of TD bonds at a price of 101. The TD bonds pay cash interest at the annual rate of 7%
Suppose Mike corporation buys $1,000,000 of TD bonds at a price of 101. The TD bonds pay cash interest at the annual rate of 7% and mature at the end of five years.) i. How much did Mike corporation pay to purchase the bond investment? How much will Mike corporation collect when the bond investment matures? ii. How much cash interest will Mike Corporation receive each year from TD? iii. Will Mike Corporation annual interest revenue on the bond investment be more or less than the amount of cash interest received each year? Give your reason.
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