Sounds like a lovely place . <| sep |> Thank god for that , too . If I had to go around cleaning up encroaching tree colonies I ' d go insane . <| sep |> Not quite . Interest payments are CFO under GAAP or CFO or CFF under IFRS . Interest is calculated as carrying value times the ytm at issuance . So during the first year , the interest expense will be the same for ABC and XYZ . But in year 2 , the bond issued at a discount will have a carrying value 10 m , while the bond issued at a premium will have a carrying value 10 m , so ABC will report higher interest expense , thus higher CFO after the initial period . Kind of a tricky question . Also , amortization the difference between the interest and coupon payment is s noncash expense , and will not be reported as a CFF . You are confusing principal repayment at redemption , who ' s IS a CFF