Morada (Sep/Dec 16)

This topic has 1 reply, 2 voices, and was last updated 5 years ago by John Moffat.

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November 27, 2020 at 11:53 pm #596780
sagaruprety
Member
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Why have they not calculate MV of the debt like they did in first 2 case but directly assume book value of debt is equivalent to the market value of it. Do we have any methodology (read short cut) to find out at what rate we don’t need to calculate PV of debt and assume MV is equal to BV?
November 28, 2020 at 10:00 am #596817
John Moffat
Keymaster
- Topics: 57
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The MV of debt will be the same as the book value is the coupon rate is the same as the investors required rate of return (in this case they are both 6.2%) and if there is no premium payable on redemption.
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