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:
Bond B matures in 16 years, has a face (par) value of $1,000, and has a yield to maturity of 9.00%. Bond B is a zero-coupon bond.
What is the
Express your answer to the nearest cent.
Bond:
It is a debt instrument issued by the company from the investors to raise capital for the purpose of business expansion. The firm pays coupon payments to the debt holders. These coupon payments represent the cost of capital for the firm and the minimum acceptable rate of return for the debt holders.
Information Provided:
- Maturity = 16 years
- Par value = $1000
- Yield to Maturity = 9.00%
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