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 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.
Become a member and unlock all Study Answers
Try it risk-free for 30 daysTry it risk-free
Ask a question
Our experts can answer your tough homework and study questions.Ask a question Ask a question
Learn more about this topic:
from Financial Accounting: Help and ReviewChapter 8 / Lesson 7