Bond Values and Discounts

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» Bond Values and Discounts

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Aug 24, 2007, 06:07 PM

pnixon

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Join Date: Aug 2007

Posts: 1

Bond Values and Discounts

A company issues $100,000.00 of it 10-year, 8% bonds to yield 10% on January 1, Year 1. The bonds pay interest annually on December 31. The bonds were sold with a discount of $12,289.00. The bonds book value at the end of Year 1 is?

A. $88,482.00
B. $96,482.00
C. $100,000.00
D. $100,771.00

I am having problems for some reason understand bonds. If someone can help me with an answer and explain how they got the answer, I would appreciate it.

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