Wesimann Co. issued 11-year bonds a year ago at a coupon rate of 7.7 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 6 percent, what is the current bond price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current bond price
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:
Face amount (fv): $1,000
Interest payment (pmt): $1,000*7.7%/2= $38.5
Market interest rate (rate): 6%/2= 3%
Periods to maturity (nper): 10*2= 20 (since 11 year bond was issued 1 year ago=10)
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