Firm A Face value- RM 1000000 Maturity- 10 years Coupon rate- 8% Market rate- 7% Redeem at 101% Firm B Face value- RM 1000000 Maturity- 10 years Coupon rate- 8% Market rate- 9% Redeem at Fair value Do amortisation table- effective rate for Firm A and Firm B with these elements: (Year, beginning amount, effective rate, coupon interest paid, discount amortisation and ending amount) Transaction cost = RM 45000
Firm A Face value- RM 1000000 Maturity- 10 years Coupon rate- 8% Market rate- 7% Redeem at 101% Firm B Face value- RM 1000000 Maturity- 10 years Coupon rate- 8% Market rate- 9% Redeem at Fair value Do amortisation table- effective rate for Firm A and Firm B with these elements: (Year, beginning amount, effective rate, coupon interest paid, discount amortisation and ending amount) Transaction cost = RM 45000
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 1Q
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Question
Firm A
Face value- RM 1000000
Maturity- 10 years
Coupon rate- 8%
Market rate- 7%
Redeem at 101%
Firm B
Face value- RM 1000000
Maturity- 10 years
Coupon rate- 8%
Market rate- 9%
Redeem at Fair value
Do amortisation table- effective rate for Firm A and Firm B with these elements:
(Year, beginning amount, effective rate, coupon interest paid, discount amortisation and ending amount)
Transaction cost = RM 45000
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