1 company issues bonds at par other company issues bonds at discount because both companies recieved the same amount, the bonds issued at a discount will have a higher face value and higher periodic interest expense on the income statement?
if both companies have the same credit rating / borrowing cost, the discount bond will start with interest expense equal to par bond interest expense in year 1. the discount bond’s interest expense will increase each year due to bond amortization whereas the par bond’s interest expense will be constant (=coupon rate).
got cha. where is does “bond amortization” show up?
its the difference between actual coupon payment and interest expense recorded on the IS.
oz… if i pass this level it will be because of ur help! Thanks so much.
thats too much credit! all the best!!!