O Corp issues 5%, 20-year bonds with a total face amount of $1,000,000. The market interest rate for bonds of similar risk and maturity is 5%. Interest is paid annually. $ interest payment? 1. How much will be paid in interest each 2. (rounded to nearest dollar). What is the present value of the interest payments? 3. $ What is the issue price of the bond?
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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