At the beginning of current year, Colt Company issued ten-year bonds with a face amount of P5,000,000 and a stated interest rate of 8% payable annually at every year-end. The bonds were priced to yield 10%. PV of 1 for 10 periods at 10% 0.3855 PV for an ordinary annuity for 1 for 10 periods at 10% 6.145 What is the issue price of the bonds? 5,000,000
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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