Complete the below table to calculate the price of a $1.0 million bond issue under each of the following independent assumptions (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1): 1. Maturity 12 years, interest paid annually, stated rate 10%, effective (market) rate 12%. 2. Maturity 9 years, interest paid semiannually, stated rate 10%, effective (market) rate 12%. 3. Maturity 8 years, interest paid semiannually, stated rate 12%, effective (market) rate 10%. 4. Maturity 10 years, interest paid semiannually, stated rate 12%, effective (market) rate 10%. 5. Maturity 15 years, interest paid semiannually, stated rate 12%, effective (market) rate 12%
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:
Complete the below table to calculate the price of a $1.0 million bond issue under each of the following independent assumptions (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1):
1. Maturity 12 years, interest paid annually, stated rate 10%, effective (market) rate 12%.
2. Maturity 9 years, interest paid semiannually, stated rate 10%, effective (market) rate 12%.
3. Maturity 8 years, interest paid semiannually, stated rate 12%, effective (market) rate 10%.
4. Maturity 10 years, interest paid semiannually, stated rate 12%, effective (market) rate 10%.
5. Maturity 15 years, interest paid semiannually, stated rate 12%, effective (market) rate 12%.
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