the market value of debt is calculated as follows >
($5.20 × 1/1.049) + ($5.20 × 1/1.0492) + ($105.20 × 1/1.0493) = $100.82
Total value = $42 million × 100.82/100 = $42,344,400
sir why are we dividing with (100.82 with 100) to find the total value ?
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5y ago#1$42M is the total nominal value.
The market value is $100.82 for every $100 nominal value.
So, if it makes it more obvious, the total number of bonds is $42M/$100. The market value of each bond is $100.82.
So the total market value of all the debt is $42M/$100 x $100.82.
ok sir, thanks
5y ago#3You are welcome :-)
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