# Issuance of bonds (at a premium or discount)

 bet 1/12 Sana 10.01.2019 Hajmi 449 b.

• ## Present value concept:

• Present value of \$1 is the value today of \$1 to be received at some future date, given a specific interest rate.
• ## Example:

• 1. What is the present value of \$100 to be received a year from now given an annual market interest rate of 10%?
• ## P.V.  (1+10%) = \$100

• P.V. = \$100/1.1
• = \$100  0.9091
• = \$90.91

• ## P.V  (1+10%)  (1+10%) = \$100

• P.V  (1+10%)2 = \$100
• P.V.  1.21 = \$100
• P.V. = \$100 / 1.21
• = \$100  0.8264
• = \$82.64

• ## Bond Indenture is an agreement between the bond issuer and investors stating the following:

• Interest rate of bonds;
• Interest Payment dates;
• The maturity date of bonds;
• The type of bonds: callable, convertible,..

• ## 2. Print bond certificates and write indenture (to set the terms of bond issue such as the stated interest rate, the interest payment date and the maturity date…)

• Do'stlaringiz bilan baham:

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