Bond Issuance

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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 firm is in the 40 percent tax bracket, and the bond has a $1,000 par value. 

Bond     Proceeds per bond     Size of issue     Initial maturity of bond     Years remaining to maturity 
A     $ 985     10,000 Bonds     20 years     15 years 
B     1,0325     20,000     25     16 
C     1,000     22,500     12     9 
D        960      5,000     25     15 
E     1,035     10,000     30     16 


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 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 from the unamortized discount associated with the retirement now of each of these bonds, using the values developed in part (d).