per bond, at 105. Eá An entity issued 5,000 10-year bonds, face amount pond is accompanied by one warrant that permits the bondholder to purchase equity shares, par P100, at P110 per share. Assume that the interest payable annually at a nominal rate of 10% per annum. When the bonds are issue, the prevailing market rate of interest for similar bon without warrants is 12% per annum.
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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