To find the interest rate Ford Motor Company is paying on the borrowed funds, we need to calculate the annual coupon rate of the bond. The annual coupon rate can be determined by taking the annual coupon payment and dividing it by the bond's face value. Then, to express this as a percentage, we multiply the result by 100.
Here's the step-by-step calculation:
1. Take the annual coupon payment: $30.
2. Divide the annual coupon payment by the bond's face value: $30 / $1,000 = 0.03.
3. Multiply the result by 100 to get the percentage: 0.03 * 100 = 3%.
So, the interest rate Ford is paying on the borrowed funds is 3 percent.
