Assume a company issues a financial instrument for ($ 50,000) in (20 mathrm{X} 2) and retires it

Question:

Assume a company issues a financial instrument for $\$ 50,000$ in $20 \mathrm{X} 2$ and retires it through an open market purchase for $\$ 56,000$ in $20 X 5$. In each of the intervening years, an annual payment of $\$ 2,500$ was paid to the investor. How will the financial instrument affect earnings in each of the years if it is classified as debt? As equity?

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