Breach Candy wants to issue new 12-year debt. Breach Candy has already issued debt with 7.4 percent coupon interest, priced at $939.63, These bonds pay interest twice a year and their time to maturity is 12 years. If Breach Candy wants to sell the new debt at par and assuming a par value of $1,000 what coupon interest rate should Breach Candy set on its new debt?
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:
Breach Candy wants to issue new 12-year debt. Breach Candy has already issued debt with 7.4 percent coupon interest, priced at $939.63, These bonds pay interest twice a year and their time to maturity is 12 years. If Breach Candy wants to sell the new debt at par and assuming a par value of $1,000 what coupon interest rate should Breach Candy set on its new debt?
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