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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
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
I) determine if the debenture is issued premium or discount
II) determine the fair value of the debentures ?
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