Cadbury Limited has a public traded debt (debentures) with a face value of R3 million. The coupon rate of the debenture is 8% and the current market interest rate is 11%. The debenture has 7 years to maturity. Calculate the present value of the debenture after 7 years Note that: the coupon rate will give a yearly interest amount of = 8% X R3million= R240 000 The current market interest (i) is used to calculate the present factor and formula is present factor= 1/(1+i)n round off the answer four decimal places

Cadbury Limited has a public traded debt (debentures) with a face value of R3 million. The coupon rate of the debenture is 8% and the current market interest rate is 11%. The debenture has 7 years to maturity. Calculate the present value of the debenture after 7 years Note that: the coupon rate will give a yearly interest amount of = 8% X R3million= R240 000 The current market interest (i) is used to calculate the present factor and formula is present factor= 1/(1+i)n round off the answer four decimal places

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 9P

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