Years to matunty Par value of bond Coupon rate Frequency interest paid per year Effective annual rate Calculation of periodic rate: Nominal annual rate Periodic rate Calculation of bond price: Number of periods Interest rate per period Coupon payment per period Par value of bond Price of bond 15 $1,000.00 9.00% 2 10.42% 0.00% $1,000.00 Formulas UNIA Formulas IN/A INIA JIN/A
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:
Excel Online Structured Activity: Bond valuation
You are considering a 15-year, $1,000 par value bond. Its coupon rate is 9%, and interest is paid semiannually. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below.
If you require an "effective" annual interest rate (not a nominal rate) of 10.42%, how much should you be willing to pay for the bond? Do not round intermediate steps. Round your answer to the nearest cent.
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