What is the principle amount to this in this equation? On December 31, 2016, Interlink...

Question:

What is the principle amount to this in this equation?

On December 31, 2016, Interlink Communications issued 4% stated rate bonds with a face amount of $116 million. The bonds mature on December 31, 2046. Interest is payable annually on each December 31, beginning in 2017.

Bonds Payable:

Bonds are long-term debt instruments issued by businesses in order to raise capital. These bonds are characterized by their face amounts (maturity values) which must be repaid upon maturity and their interest rates which determine the interest to be paid upon the face value. A bond's issuance price depends on its interest rate in comparison to the market rate.

Answer and Explanation:

"Principle" when referring to bonds is the face value of the bonds. Thus, the principle amount in this equation is equal to its face amount of $116 million.


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Long-Term Debt: Definition, Cost & Formula

from Financial Accounting: Help and Review

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