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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 $9,075,000THE PRESENT VALUE OF DEBT BEING:
per $100interest (5 x 2.55) 12.75
redemption ( 100 x 0.78) 78
TOTAL 90.75therefore equity being (1,200,000 – 9,075,000) 2,925,000
and NCL at initial value of 9,075,000
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?
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