You graphed periodic interest expense and cash interest paid over the life of a bond.You noticed that the periodic interest expense line is increasing and greater than thecash interest paid line. Identify the statement below that is best described by the graph you drew.

Question

Quizplus · Accepted Answer

When a bond is issued at a discount, the periodic interest expense increases over time and is greater than the cash interest paid, as the discount is amortized over the life of the bond.

You Graphed Periodic Interest Expense and Cash Interest Paid Over