Chamberlain Co. wants to issue new 14-year bonds for some much-needed expansion projects. The company currently has 8.6 percent coupon bonds on the market that sell for $1,032.95, make semiannual payments, and mature in 14 years. What coupon rate should the company set on its new bonds if it wants them to sell at par? Assume a par value of $1,000
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:
Chamberlain Co. wants to issue new 14-year bonds for some much-needed expansion projects. The company currently has 8.6 percent coupon bonds on the market that sell for $1,032.95, make semiannual payments, and mature in 14 years. What coupon rate should the company set on its new bonds if it wants them to sell at par? Assume a par value of $1,000
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