WonderWorld Widgets (WWW) needs to raise $75 million in debt. To issue the debt, WWW must pay its underwriter a fee equal to 3 percent of the issue. The company estimates that other expenses associated with the issue will total $466,000. If the face value of each bond is $1,000, how many bonds must be issued to net the needed $75 million? Assume that the firm cannot issue a fraction of a bond (i.e., half of a bond)—only “whole bonds” can be issued.
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:
WonderWorld Widgets (WWW) needs to raise $75 million in debt. To issue the
debt, WWW must pay its underwriter a fee equal to 3 percent of the issue.
The company estimates that other expenses associated with the issue will total
$466,000. If the face
issued to net the needed $75 million? Assume that the firm cannot issue a fraction
of a bond (i.e., half of a bond)—only “whole bonds” can be issued.
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