How much is the discount or premium on the bond?

A) $575,000 premium
B) $72,226 premium
C) $502,747 discount
D) $72,226 discount

Question

How much is the discount or premium on the bond?A) $575,000 premiumB) $72,226 premiumC) $502,747 discountD) $72,226 discount

Kaela Lagrimas · Accepted Answer

Final Answer : D, Explanation :  The bond is sold at a discount because the present value of the future cash flows is less than the face value of the bond. The discount is the difference between the face value and the present value. In this case, the discount is $72,226.

How much is the discount or premium on the bond?

A) $575,000 premium
B) $72,226 premium
C) $502,747 discount
D) $72,226 discount

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