21.If bonds are issued at a premium, the bond issuer will pay the bondholders an amount lower than the issue price at maturity. 22.The effective rate of interest for a particular bond issue is the...

21.If bonds are issued at a premium, the bond issuer will pay the bondholders an amount lower than the issue price at maturity.

22.The effective rate of interest for a particular bond issue is the market rate of interest for other investments with similar levels of risk.

23.The effective interest rate method of amortizing bond premium or discount gives a constant amount of interest expense every period.

24.If a bond discount is amortized using the effective interest method, the total amount of interest recognized over the life of the bond is the same as if the straight-line method is used.

25.The tax deductibility of interest expense on bonds makes the effective cost of borrowing less than the amount of cash paid for interest.

26.The after-tax interest cost of debt equals total interest expense multiplied by the tax rate.

27.The times interest earned ratio is usually calculated as the ratio of net income to interest expense.