- 1). Determine the face value of the bond. The face value of the bond is normally $1,000. This is also known as the redemption price. For example, a bond has a face value of $1,000.
- 2). Verify the original cost of the bond. This is the price the investor paid for the bond. For example, the investor paid $980 for the bond.
- 3). Subtract the cost of the bond from the face value of the bond to calculate the original issue discount. In the example, $1,000 minus $980 equals an original issue discount of $20.
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