9. Company BOND, issued 1,000 bonds with par value of $500 and coupon rate of 10%. Interest on bonds is paid semi-annual and the bond will mature at the end of five years. How much interest will be paid on the third semi-annual payment if the bonds were issued at the prevailing interest rate of 8% $21,346.55 $25,000.00 $41,938.79 $50,000.00
9. Company BOND, issued 1,000 bonds with par value of $500 and coupon rate of 10%. Interest on bonds is paid semi-annual and the bond will mature at the end of five years. How much interest will be paid on the third semi-annual payment if the bonds were issued at the prevailing interest rate of 8% $21,346.55 $25,000.00 $41,938.79 $50,000.00
Chapter6: Bonds (debt) - Characteristics And Valuation
Section: Chapter Questions
Problem 4PROB
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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:
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Transcribed Image Text:9. Company BOND, issued 1,000 bonds with par value of $500 and coupon rate of 10%. Interest on bonds is paid semi-annually
and the bond will mature at the end of five years.
How much interest will be paid on the third semi-annual payment if the bonds were issued at the prevailing interest rate of 8%?
$21,346.55
$25,000.00
$41,938.79
$50,000.00
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