The initial proceeds per bond, the size of the issue, the initial maturity of the bond, and the years remaining to maturity are shown in the following table for a number of bonds. In each case the bond has a $1,000 par value, and the issuing firm is in the 30% tax bracket,

Required:

a. Indicate whether each bond was sold at a discount, at a premium, or at its par value.

b. Determine the total discount or premium for each issue.

c. Determine the annual amount (after tax) of discount or premium amortized for each bond.

d. Calculate the unamortized discount or premium for each bond.

e. Determine the after-tax cash flow associated with the retirement now of each of these bonds, using the values developed in part (d).

Size of Proceeds per Bond Initial Maturity of Bond Years Remaining to Maturity Bond Issue $ 988 D 10,000 bonds 20 years 10 years B 1,035 20,000 25 18 1,000 22,000 12 8 D 975 5,000 25 16 E 1,030 10,000 30 18