ABC Corporation plans to issue an 8%, 15-year, P5,000,000 face value bonds. It will incur P300,000 as underwriting fee. What is the cost of the bond based on the following methods? 1. Interpolation method using the range 5% to 10% 2. Interpolation method using the range 8% to 10% 3. Interpolation method using the range 8% to 9%
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:
ABC Corporation plans to issue an 8%, 15-year, P5,000,000 face
1. Interpolation method using the range 5% to 10%
2. Interpolation method using the range 8% to 10%
3. Interpolation method using the range 8% to 9%
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