Issue Price The following terms relate to independent bond issues: 500 bonds; $1,000 face value; 8% stated rate; 5 years; annual interest payments 500 bonds; $1,000 face value; 8% stated rate; 5 years; semiannual interest payments 820 bonds; $1,000 face value; 8% stated rate; 10 years; semiannual interest payments 1,900 bonds; $500 face value; 12% stated rate; 15 years; semiannual interest payments Use the appropriate present value table: PV of $1 and PV of Annuity of $1 Required: Assuming the market rate of interest is 10%, calculate the selling price for each bond issue. If required, round your intermediate calculations and final answers to the nearest dollar. Need C. & D. help. Situation Selling Price of the Bond Issue a. $462090 b. $461390 c. $fill in the blank 3 d. $fill in the blank 4
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:
Issue Price
The following terms relate to independent bond issues:
- 500 bonds; $1,000 face value; 8% stated rate; 5 years; annual interest payments
- 500 bonds; $1,000 face value; 8% stated rate; 5 years; semiannual interest payments
- 820 bonds; $1,000 face value; 8% stated rate; 10 years; semiannual interest payments
- 1,900 bonds; $500 face value; 12% stated rate; 15 years; semiannual interest payments
Use the appropriate
PV of $1 and PV of
Required:
Assuming the market rate of interest is 10%, calculate the selling price for each bond issue. If required, round your intermediate calculations and final answers to the nearest dollar. Need C. & D. help.
| Situation | Selling Price of the Bond Issue |
| a. | $462090 |
| b. | $461390 |
| c. | $fill in the blank 3 |
| d. | $fill in the blank 4 |
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