On September 6, Irene Westing purchased one bond of Mick Corporation at 96.00%. The bond pays 9.75% interest on June 1 and December 1. The stockbroker told Irene that she would have to pay the accrued interest and the market price of the bond and a $5 brokerage fee. What was the total purchase price for Irene? Assume a 360-day year (each month is 30 days) in calculating the accrued interest. (Hint: Final cost = Cost of bond + Accrued interest + Brokerage fee. Calculate time for accrued interest.) (Round your answer to the nearest cent.)
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:
On September 6, Irene Westing purchased one bond of Mick Corporation at 96.00%. The bond pays 9.75% interest on June 1 and December 1. The stockbroker told Irene that she would have to pay the accrued interest and the market price of the bond and a $5 brokerage fee.
What was the total purchase price for Irene? Assume a 360-day year (each month is 30 days) in calculating the accrued interest. (Hint: Final cost = Cost of bond + Accrued interest + Brokerage fee. Calculate time for accrued interest.) (Round your answer to the nearest cent.)
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