A corporation purchased a bond issued by an oil company with face value of 1000000 on Dec 31, 2020. The 3 year bond is purchased at 973357.23 to yield a market rate of 7%. the bond has a coupon rate of 6% p.a. paid semi annually every june 30 and dec 31. the corporation purchased the investments with the sole objective of collecting interests and principal payments and intend to hold this investment until maturity date. the market price on december 31 2021 was 99 on 100 on dec 2022. how much interest revenue will the corporation record on each of the interest payment date?
A corporation purchased a bond issued by an oil company with face value of 1000000 on Dec 31, 2020. The 3 year bond is purchased at 973357.23 to yield a market rate of 7%. the bond has a coupon rate of 6% p.a. paid semi annually every june 30 and dec 31. the corporation purchased the investments with the sole objective of collecting interests and principal payments and intend to hold this investment until maturity date. the market price on december 31 2021 was 99 on 100 on dec 2022. how much interest revenue will the corporation record on each of the interest payment date?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
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A corporation purchased a bond issued by an oil company with face value of 1000000 on Dec 31, 2020. The 3 year bond is purchased at 973357.23 to yield a market rate of 7%. the bond has a coupon rate of 6% p.a. paid semi annually every june 30 and dec 31. the corporation purchased the investments with the sole objective of collecting interests and principal payments and intend to hold this investment until maturity date. the market price on december 31 2021 was 99 on 100 on dec 2022. how much interest revenue will the corporation record on each of the interest payment date?
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