Whispering Corporation sold 140 convertible, 10-year bonds at par for $140,000. Each bond pays 3% annual interest and each bond can be c
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:
Whispering Corporation sold 140 convertible, 10-year bonds at par for $140,000. Each bond pays 3% annual interest and each bond can be converted to ten common shares at the bondholder’s request. When the bonds were issued common shares were trading for $10 per share. The market rate of interest for similar bonds without conversion rights was 5%.
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