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John
suppose a Co promise to repay at a premium of 10% in 5 years time..Investors invest $ 500 and getting interest of 8% each year.
How much interest will investors get each year and on maturity how much Co need to repay the investors?
I’m confuse with the $100 nominal value thing!
On every $100 nominal, they will get $8 interest per year, and will be repaid $100 + 10% = $110 in 5 years time.
If the investor is investing $500, then it depends on the market value as to how many units he will buy. If he is investing when the debt is first issued, then the answer is 5 times the figures above.
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