Answered: A P10,000, 8% bond pays dividends semi…

A P10,000, 8% bond pays dividends semi annually and will be redeemed at 110% on April 29, 2027.It is brough on April 29, 2021 to yield 6% compounded annually. Find the price when it was brought.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter2: The Domestic And International Financial Marketplace

Section: Chapter Questions

Problem 5P

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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 P10,000, 8% bond pays dividends semi annually and will be redeemed at 110% on April 29, 2027.It is brough on April 29, 2021 to yield 6% compounded annually. Find the price when it was brought.

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