Hint: You have more information than you need.

1. Book value of a bond (principal + interest payable) at the beginning of the year = $100
2. Market value of the bond (principal + interest payable) at the beginning of the year = $120
3. Discount rate prevailing when the bond was issued = 10%
4. Discount rate prevailing at the beginning of the year = 8%
5. Payments to bondholders during the year = $7
6. The bond was bought back for $95 at the end of the year.

What is the Gain (or loss) on bond buyback?