问题如下:
When market interest rate is 7%, a company issues a $1 million bond with maturity of 3-year, a 5% coupon rate, and annual interest payments.
Which of the following statements is the most correct?
选项:
A. The total interest expense reported by the issuer over the life of the bond will be $150,000.
B. The total interest expense reported by the issuer over the life of the bond will be $202,486.32.
C. The total interest expense reported by the issuer over the life of the bond will be $52,486.32.
解释:
B is correct.
Method 1:
Coupon payments + discount interest = coupon payments + (face value - issue value)= $150,000 + ($1,000,000 - $947,513.68) = $202,486.32
.