Cadbury Limited has a public traded debt (debentures) with a face value of R3 million. The coupon rate of the debenture is 8% and the current market interest rate is 11%. The debenture has 7 years to maturity. Calculate the present value of the debenture after 7 years Note that: the coupon rate will give a yearly interest amount of = 8% X R3million= R240 000 The current market interest (i) is used to calculate the present factor and formula is present factor= 1/(1+i)n round off the answer four decimal places
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3.2 Cadbury Limited has a public traded debt (debentures) with a face value of R3 million. The coupon rate of the debenture is 8% and the current market interest rate is 11%. The debenture has 7 years to maturity. Calculate the present value of the debenture after 7 years
Note that: the coupon rate will give a yearly interest amount of = 8% X R3million= R240 000
The current market interest (i) is used to calculate the present factor and formula is present factor= 1/(1+i)n round off the answer four decimal places
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- 3.2 Cadbury Limited has a public traded debt (debentures) with a face value of R3 million. The coupon rate of the debenture is 8% and the current market interest rate is 11%. The debenture has 7 years to maturity. Calculate the present value of the debenture after 7 yearsNote that: the coupon rate will give a yearly interest amount of = 8% X R3million= R240 000The current market interest (i) is used to calculate the present factor and formula is round off the answer four decimal places.On 1 July 2018 BMW Ltd issues $2 million in 10-year debentures that pay interest each six months at a coupon rate of 10 per cent. At the time of issuing the securities, the market requires a rate of return of 12 per cent. Interest expense is determined using the effective-interest method. Formula for PV of $1 in n periods =1/(1+k)* l-1/(l#k)" Formula for present value of annuity of $1 per period for n periods = where, k is the discount rate expressed in decimal Required: (i) Determine the issue price of the debenture. (ii) Provide the journal entries at 1 July 2018 and 30 June 2019.Pacific Filght PLC has in issue K500,000 10% irredeemable debentures. Investors currently require 8% return per annum. What will be the market value of the debt?
- 2. A firm's bonds have a maturity of 10 years with a $1,000 face value, have a 6% semiannual coupon, and currently sell at a price of $1,100. If the bonds are callable in 5 years at $1,030, what are their nominal YTC?On 1 july 2018 BMw ltd issues $2 million in 10 year debentures that pay interest each six months at a coupon rate of 10 percent. At the time of issuing the securities, the market requires a rate of return of 12 %. Interest expense is determined using the effective interest method. Formula for PV of $1 in n periods = [1/1-(1+k)n/ k Formula for present value of annuity of $1 per period for n periods =[ 1-1/(1+k)n] / k where k is the discount rate expressed in decimal Required 1. Determine the issue price of the debenture 2. Provide the journal entries at 1 July 2018 and 30 June 2019An insurance company has liabilities of £5 million due in 11 years' time and £13 million due in 17 years' time. The assets of the company consist of two zero-coupon bonds, one paying £X million in 7 years' time and the other paying £Y million in 22 years' time. The current interest rate is 7% per annum effective. Find the nominal value of Y (i.e. the amount, IN MILLIONS, that bond Y pays in 22 year's time) such that the first two conditions for Redington's theory of immunisation are satisfied. Express your answer to THREE DECIMAL PLACES.
- On 1 July 2018 BMW Ltd issues $2 million in 10-year debentures that pay interest each six months at a coupon rate of 10 per cent. At the time of issuing the securities, the market requires a rate of return of 12 per cent. Interest expense is determined using the effective-interest method. Formula for PV of $1 in n periods =1/(1+k)" Formula for present value of annuity of $1 per period for n periods = where, k is the discount rate expressed in decimal Required: (1) Determine the issue price of the debenture. (H) Provide the journal entries at 1 July 2018 and 30 June 2019.A company has issued 10-year bonds, with a face value of P1,000,000 in P1,000 units. Interest at 16% is paid quarterly. If an investor desires to earn 20% nominal interest on P100,0000 worth of these bonds, what would 2. the selling price have to be? 3. A P1,500-bond which will mature in 10 years and with a bond rate of 15% payable annually is to be redeemed at par at the end of this period. If it is sold now for P1,390, determine the yield at this price. 4. A young mechanical engineer is considering establishing his own small company. An investment of P400,000 will be required, which will be recovered in 15 years. It is estimated that sales will be P800,000 per year and that operating expenses will be as follows:On 1 July 2018 BMW Ltd issues $2 million in 10-year debentures that pay interest each six months at a coupon rate of 10 per cent. At the time of issuing the securities, the market requires a rate of return of 12 per cent. Interest expense is determined using the effective-interest method. Formula for PV of $1 in n periods =1/(1+k)n Formula for present value of annuity of $1 per period for n periods = (1-1/ (1+k)n ) ÷ k where k is discount rate expressed in decimal Required: (i) Determine the issue price of the debenture. (ii) Provide the journal entries at 1 July 2018 and 30 June 2019.
- An insurance company has liabilities of £15 million due in 11 years' time and £6 million due in 15 years' time.The assets of the company consist of two zero-coupon bonds, one paying million in 7 years' time and the other paying million in 19 years' time.The current interest rate is 7% per annum effective.Find the nominal value of Y (i.e. the amount, IN MILLIONS, that bond Y pays in 19 year's time) such that the first two conditions for Redington’s theory of immunisation are satisfied.Express your answer to THREE DECIMAL PLACES.Choose the correct answer from followings: Shelly Ltd is planning to expand its business by issuing 15-year zero coupon bonds with a face value of $1,000. If the market interest rate is 8% per annum, compounded semi-annually, what will be the price at which you will be willing to purchase these bonds? a. $866 b. $308 c. $558 d. $803MARJ Co. has a bonds outstanding with maturity value of P1,000. The effective interest is determined to be 5%, and interest is paid annually. The bonds mature in 5 years, and its current market value is P870.12. What is the approximate annual coupon interest rate?