Assume that you purchase a $1,000 corporate bond that pays 8.25 percent interest. The dollar amount of interest that you receive each year is $82.5.
Using this formula to find the amount of annual interest
Amount of annual interest = Face value × Interest rate
Where:
Face value =$1,000
Interest rate = 8.25%
Let plug in the formula
Amount of annual interest = $1,000 × 8.25%
Amount of annual interest =$82.5
Therefore the amount of annual interest is $82.5.
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