The total interest expense on a $200,000, 10 percent, 10-year bond issued at 95 would be

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The bond is issued at a discount (95% of face value), so the total interest expense includes both the annual interest payments and the amortization of the discount. The annual interest is $20,000 ($200,000 x 10%), and the discount is $10,000 ($200,000 - $190,000). Over 10 years, the total interest expense is $200,000 + $10,000 = $210,000.

The Total Interest Expense on a $200,000, 10 Percent, 10-Year