The ABC Company issued a 4 year maturity 12 % coupon bond with a total nominal value of 2.000.000 ₺. The bonds were sold at 10 % discount, and the flotation expenses amounted to 8% of the total nominal value. Corporate income tax rate is equal to 20 %. Compute the cost of this bond issue when the principal is paid a) at the end of the maturity, and, b) in equal instalments. i have this example in University for practice but I can’t understand this part from where this number coming 192.000
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:
The ABC Company issued a 4 year maturity 12 % coupon bond with a total nominal value of 2.000.000 ₺. The bonds were sold at 10 % discount, and the flotation expenses amounted to 8% of the total nominal value. Corporate income tax rate is equal to 20 %. Compute the cost of this bond issue when the principal is paid
a) at the end of the maturity, and,
b) in equal instalments.
i have this example in University for practice but I can’t understand this part from where this number coming 192.000
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