On1January2019,Jet2Com Ltd,a regional Middle Earth airline company, issued at par $100million AA-rated5-year fixed rate debt securities with

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Question:

On 1 January 2019, Jet2Com Ltd, a regional Middle Earth airline company, issued at par $100 million AA-rated 5-year fixed rate debt securities with an annual coupon interest rate of 5%.

It is 29 December 2023. Because of higher global interest rates, investments in similar debt securities, but with different maturity dates, are trading in an active market at 80% of par value after payment of accrued interest.

Jet2Com Ltd uses the quoted price of the asset in an active market as its initial input into the fair value measurement of the debt securities. Jet2 Com is a going concern airline company and credit rating agencies, such as Fitch rate the debt securities AA.

Required 1. Determine the fair value of the debt securities on 29 December 2023.