Cadbury Limited has a public traded debt (debentures) with a face value of R3 million. The coupon rate of the debenture is 8% and the current market interest rate is 11%. The debenture has 7 years to maturity. Calculate the present value of the debenture after 7 years Note that: the coupon rate will give a yearly interest amount of = 8% X R3million= R240 000 The current market interest (i) is used to calculate the present factor and formula is round off the answer four decimal
Cadbury Limited has a public traded debt (debentures) with a face value of R3 million. The coupon rate of the debenture is 8% and the current market interest rate is 11%. The debenture has 7 years to maturity. Calculate the present value of the debenture after 7 years Note that: the coupon rate will give a yearly interest amount of = 8% X R3million= R240 000 The current market interest (i) is used to calculate the present factor and formula is round off the answer four decimal
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
3.2 Cadbury Limited has a public traded debt (debentures) with a face value of R3 million. The coupon rate of the debenture is 8% and the current market interest rate is 11%. The debenture has 7 years to maturity. Calculate the present value of the debenture after 7 years
Note that: the coupon rate will give a yearly interest amount of = 8% X R3million= R240 000
The current market interest (i) is used to calculate the present factor and formula is round off the answer four decimal places.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education