§ 15143 Bond Interest Rate Limit

This law says a bond can't have an interest rate higher than 8% a year, and the interest can be paid once or twice each year.

A company wants to sell a $10,000 bond that promises to pay 9% interest each year.

Because the interest rate is 9%, which is above the 8% limit, the bond would break the law and can't be sold that way.

Interest = Principal × Rate × TimeFraction (where Rate ≤ 0.08)

Find the bond's principal amount (the money borrowed).
Make sure the interest rate you want to use is 8% or less (0.08 as a decimal).
Decide if interest is paid once a year (TimeFraction = 1) or twice a year (TimeFraction = 0.5 for each payment).
Multiply Principal × Rate × TimeFraction to get the interest amount for each payment.

A $10,000 bond with the maximum allowed rate of 8% paid once a year.

Result: Interest = 10000 × 0.08 × 1 = $800 per year

This law says a bond can't have an interest rate higher than 8% a year, and the interest can be paid once or twice each year.

A company wants to sell a $10,000 bond that promises to pay 9% interest each year.

Because the interest rate is 9%, which is above the 8% limit, the bond would break the law and can't be sold that way.

Interest = Principal × Rate × TimeFraction (where Rate ≤ 0.08)

Find the bond's principal amount (the money borrowed).
Make sure the interest rate you want to use is 8% or less (0.08 as a decimal).
Decide if interest is paid once a year (TimeFraction = 1) or twice a year (TimeFraction = 0.5 for each payment).
Multiply Principal × Rate × TimeFraction to get the interest amount for each payment.

A $10,000 bond with the maximum allowed rate of 8% paid once a year.

Result: Interest = 10000 × 0.08 × 1 = $800 per year

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