SIMCO Corp. issued bonds on Jan 1, year 20x1. The bonds’ face value is $100,000 with a coupon rate of 10% and yield 12%. The bonds are dated January 1; year 20x1 will mature in five years. SIMCO operates on a calendar year and pays interest once per year on December 31. Determine: The issue price of the bonds Record the interest expenses at December 31, 20x1
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:
SIMCO Corp. issued bonds on Jan 1, year 20x1. The bonds’ face value is $100,000 with a coupon rate of 10% and yield 12%. The bonds are dated January 1; year 20x1 will mature in five years. SIMCO operates on a calendar year and pays interest once per year on December 31.
Determine:
- The issue price of the bonds
- Record the interest expenses at December 31, 20x1
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