stayingfocused wrote: so if I were an investor, would I prefer to invest in a bond premium or bond discount?

Jams I have had hard time with bonds and leases, you are not alone. I think your question for the 10% in Kristy is because you must calc. the interest for the entired year and then look for the 3 months period; therefore IF you divide 10% by two and then make a calc. for the three months it will be like calculating the three months out of 5% at YEAR.

(1,000,000 *10%*6/12) or 5% is ok (but the example is 10%*3/12).

Good luck with pension. I just started and I find it as bad as F5.

Additional Paid-In Capital is increased by the fair value of the stock warrants whenever bonds with detachable stock warrants are issued.

Is the same true for non-detachable warrants? Would these just have a proportional amount of fair value allocated to them?

What is the formula in the Simulation spreadsheet to obtain the 20 year discount rate to multiply the principal in this question?

Drew Company is a retail company that specializes in selling office supplies to law firms.   On January 2, 2007, Drew Company issued $200,000 of 9% ten-year term bonds at an effective annual interest rate (yield) of 10%.   The bonds pay interest semiannually on June 30 and December 31. Drew uses the effective interest method of amortization.

I can calculate the interest =PV(.02, 20, -9,000) and I can discount at 5% for 20 periods to get .376, but I assume that there is a formula to calculate the answer.