Bonds sold at a premium - Irving Inc. sold bonds with a $50,000, 10% interest, and 10-year term at $52,000. What is the total amount of interest expense over the life of the bonds?
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:
Bonds sold at a premium - Irving Inc. sold bonds with a $50,000, 10% interest, and 10-year term at $52,000. What is the total amount of interest expense over the life of the bonds?
Bonds payable are financial instruments. It representing a company’s commitment to pay back a specified sum to the owner of the instrument in a specified time. Company also needs to pay periodic interest over the life of the bond.
The time span in which a company has to pay back the principal called term of the bond.
A bond is a formal contract that requires the issuing corporation to pay the bondholders
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Interest every six months as per stated interest rate, and
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The principal amount on the bond's maturity date.
There are two advantages of issuing bonds than raising money from common stock.
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Bonds holders are not entitled for ownership interest.
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Bonds are lower cost instrument.
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