Tyler Corp. is planning to issue long-term bonds payable to borrow for a major expansion. The chief executive officer, Robert Tyler, asks your advice on some related matters:

a. At what type of bond price will Tyler have total interest expense equal to the cash interest payments?

b. Under which type of bond price will Tyler’s total interest expense be greater than the cash interest payments?

c. The stated interest rate on the bonds is 3 percent, and the market interest rate is 4 percent. What type of price can Tyler expect for the bonds?

d. Tyler could raise the stated interest rate on the bonds to 5 percent (market rate is 4 percent). In that case, what type of price can Tyler expect for the bonds?