Bond Amortization Table: Calculate Each Payment

A bond amortization table shows how each interest payment and principal repayment changes a bond’s carrying value over time; this calculator builds a simplified schedule for a fixed-rate bond. Enter face value, annual coupon rate, market yield, and years to maturity to see the periodic interest, discount or premium amortization, and ending carrying value.

Formula

This calculator illustrates the effective-interest method for a bond issued at a discount, using annual periods and a constant market yield. The first output is carrying value after one annual period:

CV₁ = CV₀ × (1 + y) − C

• CV₀ is the starting carrying value, approximated here by face value, in dollars.
• y is the annual market yield as a decimal: the yield input divided by 100.
• C is the annual cash coupon, calculated as face value × coupon rate as a decimal.
• CV₁ is the carrying value after the first annual interest period, in dollars.

The table’s other outputs are the annual cash coupon, first-period discount amortization (CV₁ minus face value), and face value due at maturity. This is a teaching illustration, not a full schedule: it assumes the bond begins at face value and therefore does not calculate a market-priced issue amount. A complete accounting schedule starts with the bond’s actual initial carrying amount, usually the issue price net of any separately accounted-for costs, and repeats the effective-interest calculation for each period.

Worked Example

Using the defaults—$1,000 face value, 6% coupon, 8% market yield, and five years—first calculate the annual cash coupon:

C = $1,000 × 0.06 = $60.00

The first-period carrying-value calculation is:

CV₁ = $1,000 × (1 + 0.08) − $60 = $1,020.00

So the calculator returns a $1,020.00 carrying value after the first period, a $60.00 annual coupon, $20.00 of first-period discount amortization, and $1,000.00 due at maturity.

This example deliberately exposes an important limitation: a bond with a 6% coupon and an 8% market yield would ordinarily be priced below face value, not begin at $1,000. The simplified first-period result above is an arithmetic illustration, not a self-consistent valuation schedule. For an actual discount-bond table, enter the observed issue price as the starting carrying value in the formula, rather than treating face value as the issue price. The formula would then be CV₁ = issue price × (1 + yield) − coupon.

How a Bond Amortization Table Works

In bond accounting, “amortization” means gradually recognizing the difference between the bond’s issue price and the amount repaid at maturity. A discount bond is issued below face value; a premium bond is issued above it. Under the effective-interest method, interest expense for a period is based on the beginning carrying value multiplied by the market yield per period. Cash interest is based on face value multiplied by the coupon rate. The difference changes the carrying value.

• Discount: interest expense usually exceeds the cash coupon, so carrying value rises toward face value.
• Premium: interest expense is usually lower than the cash coupon, so carrying value falls toward face value.
• At maturity: the carrying value reaches face value, and the issuer repays face value, assuming payment in full.

“Bond amortization table” can also refer to the issuer’s accounting schedule or an investor’s cost-basis tracking. Those schedules address different reporting purposes; tax treatment and reporting requirements depend on applicable rules and are not calculated here.

What a Full Schedule Includes

A proper table has one row for each interest period, typically with columns for opening carrying value, cash coupon, effective interest expense, discount or premium amortization, and closing carrying value. For annual periods, the effective-interest calculation is:

Interest expense = opening carrying value × annual yield
Amortization = interest expense − cash coupon
Closing carrying value = opening carrying value + amortization

For a discount, amortization is positive. For a premium, it is negative. When coupons are paid more than once a year, use the yield and coupon for each period, not annual amounts repeated without adjustment. For example, semiannual periods generally require the applicable half-year yield and coupon payment. A schedule also needs the actual issue price and payment frequency; this calculator does not collect those inputs, so it cannot produce a complete period-by-period table.

Using the Calculator and Checking Results

Enter amounts and rates as positive values. Coupon and market yield are annual percentages, and the example uses annual coupon payments. The result is a mathematical illustration, not an estimate of a bond’s market value or an accounting entry. To construct a schedule for a real bond, verify these details first:

1. Find the face value, issue price or current opening carrying value, coupon rate, yield at issuance, maturity date, and payment frequency from the relevant records.
2. Convert annual rates to the schedule’s period basis. For two payments per year, calculate with half-year periods and the matching periodic rates.
3. Apply effective interest to each period’s opening carrying value; subtract the cash coupon to determine amortization.
4. Carry the unrounded values through the schedule, then round displayed amounts consistently. The final row may require a small rounding adjustment so carrying value agrees with the amount due.

Do not confuse coupon rate with market yield: the coupon determines cash interest, while the yield at issuance drives effective-interest expense. Nor does the five-year input create five rows here; the calculator reports first-period arithmetic and face value at maturity, not a complete schedule.

Frequently Asked Questions

What is a bond amortization table?
It is a period-by-period schedule showing how interest expense, cash coupon payments, and discount or premium amortization affect a bond’s carrying value.

How do you calculate bond discount amortization?
With the effective-interest method, multiply opening carrying value by the period yield to get interest expense, then subtract the cash coupon. For a discount, the difference increases carrying value.

Why does a bond’s carrying value change?
A discount or premium is allocated over the bond’s life. The carrying value moves toward face value as maturity approaches, assuming the bond is held and payments occur as scheduled.

Is this a complete bond amortization schedule?
No. It gives an illustrative first-period result and maturity face value. A complete schedule also needs the actual starting price, coupon frequency, and a row for each period.

Does a higher coupon mean a higher bond yield?
Not necessarily. Coupon rate sets contractual cash interest; yield reflects the return implied by price, payments, and maturity. A bond’s price may be above or below face value.

Limits and Assumptions

• The illustration uses annual periods and assumes a fixed coupon and yield.
• It treats face value as the starting carrying value for the shown calculation; this does not model the discount or premium at issuance.
• It excludes default, early redemption, transaction costs, taxes, accrued interest, and changing market prices.
• It does not provide investment, accounting, or tax advice. Use the bond’s actual terms and applicable accounting guidance for a real schedule.

This result is an estimate for educational purposes; the bond’s actual documents and applicable accounting guidance determine the exact figures.

Related

• Amortization Table for Notes Receivable
• Real Estate Amortization Table: Payments and Balance
• Amortization Table: Interest-Only Loan Calculator

in face | Face value | $ | 1000 | 0.01 | 100000000
in coupon | Annual coupon rate | % | 6 | 0.01 | 100
in yield | Annual market yield | % | 8 | 0.01 | 100
in yrs | Years to maturity | years | 5 | 0.0833 | 50
out cv | Carrying value after first annual period | $ | face * (1 + yield / 100) - face * coupon / 100 | 2
out cash | Annual coupon payment | $ | face * coupon / 100 | 2
out amort | First-period discount amortization | $ | cv - face | 2
out maturity | Carrying value at maturity | $ | face | 2