Ventius Company issued $10,000 of four-year bonds on December 31, 2000. The coupon rate on the bonds

Question:

Ventius Company issued $10,000 of four-year bonds on December 31, 2000. The rate on the bonds is 7½%. The bonds were sold for $9,400.
a. Show four possible ways that the interest, principal, and discount can be distributed (allocated) between operating and financing cash flows for the years 2000–2004.
b. Discuss these four approaches and state your preferences.
Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...