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Market Value of Irredeemable Debentures

This topic has 1 reply, 2 voices, and was last updated 12 years ago by John Moffat.

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July 25, 2012 at 10:10 am #53852
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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
July 25, 2012 at 10:14 am #102118
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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