Market Value of Irredeemable Debentures

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  • Avatar of saeid
    Sid
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    How do you calculate Market Value of the following Irredeemable Debentures:
    $200,000 @12% with market yield of 10%.
    Answer must be $240,000


    Avatar of John Moffat
    John Moffat
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    Market value = Interest / Required return

    Interest p.a. = 12% x 200,000 = 24,000 p.a.

    Market value = 24,000 / 10% = 240,000

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