- This topic has 1 reply, 2 voices, and was last updated 5 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 September 2024 exams. Get your discount code >>
Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Q3 (b) Levante (Dec 2016)
Hi, I’d like to ask:
The answers say:
This is an extra 67,398 bond units for which Levante co will need to pay an extra $6,739,800 when the bonds are redeemed in five years.
My question:
Such extra 67,398 bond issues also create extra “Coupon payment”, but which is not mentioned in answer. Am I correct?
Thanks
No. The issue price of the new bonds of $95.72 has been calculated using a coupon rate of 5%. (The market value is always the PV of the receipts to the investor discounted at the investors required rate of return).
The coupon/interest payment each year has been taken into account in calculating the issue price.