open tuition revision mock ANDRIS-financial instrument

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December 1, 2015 at 5:05 pm #286790
amna
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sorry i can’t copy paste the question.Hope your know which question im referring to.

shouldn’t the answer for that question be:

equity $2,925,000
NCL $9,075,000

THE PRESENT VALUE OF DEBT BEING:
per $100

interest (5 x 2.55) 12.75
redemption ( 100 x 0.78) 78
TOTAL 90.75

therefore equity being (1,200,000 – 9,075,000) 2,925,000

and NCL at initial value of 9,075,000
December 1, 2015 at 6:13 pm #286805
MikeLittle
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The debt appears to be a 5% instrument with a face value of $100

So why is there an amount of $120 from which the apparent present value is being deducted? Shouldn’t that be $100 from which $90.75 should be deducted?
December 1, 2015 at 6:28 pm #286811
amna
Participant
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can you please show me the working for it?
im confused
December 1, 2015 at 6:37 pm #286816
MikeLittle
Keymaster
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That’s difficult – I don’t have the question. My response was derived applying intuitive common sense to the limited information that you provided so, no, I can’t show you my workings unless you show me the question!
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