Margaret Company Provided the ff information in relation to the issuance of bonds at the beginning of current year: Face Amount: 5,000,000 Term : 10 Years Nominal Rate: 6% Interest Payment Date : Annually on December 31 Effective Rate: 9% PV of 1 for 10 Periods at 9% = 0.422 PV of and Ordinary Annuity of 1 for 10 Periods = 6.418 What is the issue price of the bonds payable? PHP 5,000,000 PHP 4,318,000 PHP 4,035,400 PHP 2,110,000
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:
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