A $3000 bond that pays 9%semi-annually is redeemable at par in 15 years. Calculate the purchase price if it is sold to yield 7% compounded semi-annually(The purchase price of a bond is equal to the present value of the redemption price plus the present value of the interest payments). The purchase price is $
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:
A $3000 bond that pays 9%semi-annually is redeemable at par in 15 years. Calculate the purchase price if it is sold to yield 7% compounded semi-annually(The purchase price of a bond is equal to the
Step by step
Solved in 2 steps
