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Determine the fair value of the debentures

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Reference no: EM132618424

Question - 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 -

I) Determine if the debenture is issued premium or discount

II) Determine the fair value of the debentures?

Reference no: EM132618424

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