Question

Tano Company issues bonds with a par value of $82,000 on January 1, 2020. The bonds' annual contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 8%, and the bonds are sold for $79,849. 1. What is the amount of the discount on these bonds at issuance

Answer 1

Answer: $2151

Explanation:

The amount of the discount on these bonds at issuance will be the difference between the par value of the bond issues by Tank company and the price at which the bonds were sold. This will be:

= $82000 - $79,849

= $2151

Therefore, the amount of the discount on these bonds at issuance is $2151.