Determine if the debenture is issued premium or discount

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Reference no: EM132513150

On 1 July 2018 Power Ltd. issues $10 million in five-year debentures that pay interest each six months at a coupon rate of 5 per cent. At the time of issuing the securities, the market requires a rate of return of 8 per cent. Interest expense is determined using the effective-interest method.

Required:

Question 1: Determine if the debenture is issued premium or discount?

Question 2: Determine the Fair Value of the Debentures?

Reference no: EM132513150

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