A company has net inflows of 10 mil,11 mil, 15 mil,20 mil and 22 mil for the next 5 years. It book value today is 5 millions. The company has issuede 5000 bonds with annual interest rate of 2%, nominal value of 1000 for each of the bond and maturity 5 years. If the market interest is 3%, which is the value of the company, of the bond, and of the equity?

A company has net inflows of 10 mil,11 mil, 15 mil,20 mil and 22 mil for the next 5 years. It book value today is 5 millions. The company has issuede 5000 bonds with annual interest rate of 2%, nominal value of 1000 for each of the bond and maturity 5 years. If the market interest is 3%, which is the value of the company, of the bond, and of the equity?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 13Q: A company issued bonds with a $100,000 face value, a 5-year term, a stated rate of 6%, and a market...

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