Gordon Corporation issued $700,000 par value 2% 5 year bonds on Jan 1 2019. The bonds mature on 12/31/23 and pay semi annual interest. The market rate on the date of issue is 4%. Gordon has elected to use the straight line method for discount amortization. What is the bond issue price for the Gordon bonds? A. $586,447 B. $637,122 C. $766,299 D. $700,000 The answer is B, how do you get that using Excel formulas rather than the tables?
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:
Gordon Corporation issued $700,000 par value 2% 5 year bonds on Jan 1 2019. The bonds mature on 12/31/23 and pay semi annual interest. The market rate on the date of issue is 4%. Gordon has elected to use the
A. $586,447
B. $637,122
C. $766,299
D. $700,000
The answer is B, how do you get that using Excel formulas rather than the tables?
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