Problem 2 (What is the solution?) A company has issued 10-year bonds, with a face value of 1,000,000 Php, in 1,000 units. Interest at 16% is paid quarterly. If an investor desires to earn 20% nominal interest on 100,000 Php worth of these bonds, what would the selling price have to be? Ans should be: 82,836 Php
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:
Problem 2 (What is the solution?)
A company has issued 10-year bonds, with a face value of 1,000,000 Php, in 1,000 units. Interest at 16% is paid quarterly. If an investor desires to earn 20% nominal interest on 100,000 Php worth of these bonds, what would the selling price have to be?
Ans should be: 82,836 Php
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