A company issued a bond with a face value of $1,000,000 and a coupon rate of 8%. The bond pays interest semi-annually and has a maturity period of 5 years. Calculate the annual interest expense and the total interest expense over the life of 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:
A company issued a bond with a face value of $1,000,000 and a coupon rate of 8%. The bond pays interest semi-annually and has a maturity period of 5 years. Calculate the annual interest expense and the total interest expense over the life of the bond.
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