Margaret Company provided the following information in relation to the issuance of bonds at the beginning of current year: Face amount P800,000 Term Ten years Stated interest rate 6% Interest payment date Annually on December 31 Yield 9% At 6% At 9% Present value of 1 for 10 periods 0.558 0.422 Future value of 1 for 10 periods 1.791 2.367 Present value of an ordinary annuity of 1 for 10 periods 7.360 6.418 What is the issue price for each P1,000 bond? 1,000 864 807 700
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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