A company wants to issue new 10-year bonds for some much-needed expansion projects. The company currently has 11 percent bonds on the market that sell for $1,130.08, make semiannual payments, and mature in 10 years. What should the coupon rate on the new bonds if the company wants to sell them at par?
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:
A company wants to issue new 10-year bonds for some much-needed
expansion projects. The company currently has 11 percent bonds on the
market that sell for $1,130.08, make semiannual payments, and mature in 10
years. What should the coupon rate on the new bonds if the company
wants to sell them at par?
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