Use the following tables to calculate the present value of a $791,000, 5%, 6-year bond that pays $39,550 ($791,000 × 5%) interest annually, if the market rate of interest is 6%. Present Value of $1 at Compound Interest Periods 5% 6% 7% 10% 1 0.95238 0.94340 0.93458 0.90909 2 0.90703 0.89000 0.87344 0.82645 3 0.86384 0.83962 0.81630 0.75131 4 0.82270 0.79209 0.76290 0.68301 5 0.78353 0.74726 0.71299 0.62092 6 0.74622 0.70496 0.66634 0.56447 7 0.71068 0.66506 0.62275 0.51316 8 0.67684 0.62741 0.58201 0.46651 9 0.64461 0.59190 0.54393 0.42410 10 0.61391 0.55839 0.50835 0.38554 Present Value of Annuity of $1 at Compound Interest Periods 5% 6% 7% 10% 1 0.95238 0.94340 0.93458 0.90909 2 1.85941 1.83339 1.80802 1.73554 3 2.72325 2.67301 2.62432 2.48685 4 3.54595 3.46511 3.38721 3.16987 5 4.32948 4.21236 4.10020 3.79079 6 5.07569 4.91732 4.76654 4.35526 7 5.78637 5.58238 5.38929 4.86842 8 6.46321 6.20979 5.97130 5.33493 9 7.10782 6.80169 6.51523 5.75902 10 7.72173 7.36009 7.02358 6.14457 Round your intermediate calculations and final answer to the nearest whole dollar. $fill in the blank 1
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:
Use the following tables to calculate the present value of a $791,000, 5%, 6-year bond that pays $39,550 ($791,000 × 5%) interest annually, if the market rate of interest is 6%.
Present Value of $1 at
|
Periods
|
5%
|
6%
|
7%
|
10%
|
|
1
|
0.95238
|
0.94340
|
0.93458
|
0.90909
|
|
2
|
0.90703
|
0.89000
|
0.87344
|
0.82645
|
|
3
|
0.86384
|
0.83962
|
0.81630
|
0.75131
|
|
4
|
0.82270
|
0.79209
|
0.76290
|
0.68301
|
|
5
|
0.78353
|
0.74726
|
0.71299
|
0.62092
|
|
6
|
0.74622
|
0.70496
|
0.66634
|
0.56447
|
|
7
|
0.71068
|
0.66506
|
0.62275
|
0.51316
|
|
8
|
0.67684
|
0.62741
|
0.58201
|
0.46651
|
|
9
|
0.64461
|
0.59190
|
0.54393
|
0.42410
|
|
10
|
0.61391
|
0.55839
|
0.50835
|
0.38554
|
Present Value of
|
Periods
|
5%
|
6%
|
7%
|
10%
|
|
1
|
0.95238
|
0.94340
|
0.93458
|
0.90909
|
|
2
|
1.85941
|
1.83339
|
1.80802
|
1.73554
|
|
3
|
2.72325
|
2.67301
|
2.62432
|
2.48685
|
|
4
|
3.54595
|
3.46511
|
3.38721
|
3.16987
|
|
5
|
4.32948
|
4.21236
|
4.10020
|
3.79079
|
|
6
|
5.07569
|
4.91732
|
4.76654
|
4.35526
|
|
7
|
5.78637
|
5.58238
|
5.38929
|
4.86842
|
|
8
|
6.46321
|
6.20979
|
5.97130
|
5.33493
|
|
9
|
7.10782
|
6.80169
|
6.51523
|
5.75902
|
|
10
|
7.72173
|
7.36009
|
7.02358
|
6.14457
|
Round your intermediate calculations and final answer to the nearest whole dollar.
$fill in the blank 1
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