For inspection by a company and taxable at the same place to finance a new factory by
Question:
For inspection by a company and taxable at the same place to finance a new factory by issuing a bond. It is likely that the nominal interest rate on the bond will be somewhat lower than the expected yield that the market will make. Describe the method of effective interest in such situations, what the thinking is with the effective interstate method, and give an example of the division of interest payments and installments in the first years (keep the example simple). Assume some publishing costs. Also discuss the advantages and disadvantages of recognizing debt at fair value based on nominal and market interest rates at different times a few years after the bond is issued, and briefly describe how such a debt revaluation should go through resilience and balance sheet.
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta