Question 3.2 Cadbury Limited has a public traded debt (debentures) with a face value of R3 million. The coupon rate of the debenture is 8% and the current market interest rate is 11%. The debenture has 7 years to maturity. Calculate the present value of the debenture after 7 years Note that: the coupon rate will give a yearly interest amount of = 8% X R3million= R240 000 The current market interest (i) is used to calculate the present factor and formula is present factor= 1/(1+i)n round off the answer four decimal places

Question 3.2 Cadbury Limited has a public traded debt (debentures) with a face value of R3 million. The coupon rate of the debenture is 8% and the current market interest rate is 11%. The debenture has 7 years to maturity. Calculate the present value of the debenture after 7 years Note that: the coupon rate will give a yearly interest amount of = 8% X R3million= R240 000 The current market interest (i) is used to calculate the present factor and formula is present factor= 1/(1+i)n round off the answer four decimal places

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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