Accounting › Section L · Long-term liabilities › Topic L.1
Pricing long-term liabilities
When a company borrows for many years, the amount it receives today depends on what lenders could earn elsewhere. Pricing a bond means finding the present value of every payment it promises, and that one idea explains par, premium and discount.
In this topic
- Borrowing for the long term
- Notes versus bonds
- The language of a bond
- Kinds of bonds
- Market rate, stated rate and price
- Simple and compound interest
- Present value: the pricing tool
- Worked example: a bond sold at a discount
- Worked example: a semiannual bond at a premium
- Common mistakes to avoid
- Key takeaways
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