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Determine the issue price of the debenture

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Reference no: EM133113990

Question - On 1 July 2021, EBY Ltd issues $1 million in 10-year debentures that pay interest every six months at a coupon rate of 10 per cent. At the time of issuing the securities, the market requires a rate of return of 12 per cent. Interest expense is determined using the effective-interest method.

The formula for PV of $1 in n periods =1/(1+k)n Formula for the present value of an annuity of $1 per period for n periods = where k is the discount rate expressed in decimal.

Required - Determine the issue price of the debenture.

Reference no: EM133113990

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