If a $6,000, 10%, 10-year bond was issued at 104 on October 1, 2011, how much interest will accrue

on December 31 if interest payments are made annually

144

To calculate the interest that will accrue on the bond by December 31, you need to determine the interest payment per year and then calculate the amount of interest for a portion of the year.

First, let's find the interest payment per year. The bond is a $6,000, 10%, 10-year bond. A 10% interest rate means the bond pays an annual interest rate of 10% on its face value, which is $6,000.

The interest payment per year can be calculated as follows:
Interest Payment = Face Value * Interest Rate
Interest Payment = $6,000 * 0.10
Interest Payment = $600

Now, we need to determine the portion of the year from October 1 to December 31. There are a total of 365 days in a year, so the portion of a year from October 1 to December 31 is 92 days.

To calculate the interest that will accrue for 92 days, we need to determine the fraction of the year it represents. This can be done by dividing the number of days by the total number of days in a year:
Fraction of year = Number of days / Total number of days
Fraction of year = 92 / 365
Fraction of year = 0.2521

Finally, to calculate the interest that will accrue by December 31, we multiply the interest payment per year by the fraction of the year:
Interest Accrued = Interest Payment * Fraction of year
Interest Accrued = $600 * 0.2521
Interest Accrued ≈ $151.26

Therefore, approximately $151.26 of interest will accrue by December 31.