- This topic has 1 reply, 2 voices, and was last updated 8 years ago by .

Viewing 2 posts - 1 through 2 (of 2 total)

Viewing 2 posts - 1 through 2 (of 2 total)

- You must be logged in to reply to this topic.

OpenTuition recommends the new interactive BPP books for June 2024 exams, Get your discount code >>

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › MLIMA CO, June 13

- This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.

Viewing 2 posts - 1 through 2 (of 2 total)

- AuthorPosts
- February 26, 2016 at 11:01 am #302148
We need to calculate the value of a 13% bond with a nominal value of $40m, which is redeemable at par in ten years. In the answer it takes the future borrowing rate of 7% as a yield to maturity and discounts at this rate.

Don’t we need to calculate the yield to maturity as IRR and use it when calculating the value of the bond?

February 26, 2016 at 3:21 pm #302196But how can you calculate the IRR when you don’t know the market value? 🙂

As the answer says, it is an assumption, but it is really the only sensible assumption available (to discount at 7% – the normal rate on its borrowing).

- AuthorPosts

Viewing 2 posts - 1 through 2 (of 2 total)

- You must be logged in to reply to this topic.