Marks Private Limited is a growing organization in the industry and is showing progress in terms of capturing new markets in the industry. It has recently introduced a 5 year bond to arrange capital for entering into a new business. The coupon rate announced by the organization is 8% compounded annually with $1000 as a face value and 10% as yield to maturity. Calculate the Present Value of the bond and current yeild associated with the bond
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:
Marks Private Limited is a growing organization in the industry and is showing progress in terms of capturing new markets in the industry. It has recently introduced a 5 year bond to arrange capital for entering into a new business. The coupon rate announced by the organization is 8% compounded annually with $1000 as a face value and 10% as yield to maturity. Calculate the
- Present
Value of the bond and current yeild associated with the bond
Also comment that how the present value of the bond will be affected if the yield to maturity will become same as a coupon rate.
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