Financial management
This query is : Resolved
25 November 2018
When The Question Says : A Company Has In Issue 10% Loan Notes With Current MV Of Rs. 98. So The Rs. 98 Is A Cash Inflow Or Cash Outflow? Solving The IRR Calculation.
26 November 2018
A Company Has In Issue 10% Loan Notes With Current MV Of Rs. 98. So The Rs. 98 Is A Cash Inflow Or Cash Outflow? Solving The IRR Calculation.
The problem can be modelled as an IRR problem. Let me extend the example given by you as follows:
10% Loan Notes having a duration of 5 years are selling at Rs.96 (face value Rs.100). What is the yield to maturity?
We can model this problem as IRR:
Year 0, CF -96 (because you need to purchase the note at the prevailing market price)
Year 1 to 5 CF +10 (you will receive interest at 10% every year)
Year 5 CF +100 (you will get the maturity value of the note)
Using IRR function, you will get a YTM of 11.08%.
The problem can be modelled as an IRR problem. Let me extend the example given by you as follows:
10% Loan Notes having a duration of 5 years are selling at Rs.96 (face value Rs.100). What is the yield to maturity?
We can model this problem as IRR:
Year 0, CF -96 (because you need to purchase the note at the prevailing market price)
Year 1 to 5 CF +10 (you will receive interest at 10% every year)
Year 5 CF +100 (you will get the maturity value of the note)
Using IRR function, you will get a YTM of 11.08%.
Message likes :
1 times
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- STCG....................................................
- Supply through E-commerce Operators
- Sales return eway bill
- Relief u/s Section 89
- TAN for Partnership
- AMOUNT RECEIVED UNDER COMPULOSRY ACQUISITION OF AGRICULTURAL LAND
- GST Registration Horse racing
- Section 43B(h) – MSME Invoice Paid Before Year End but After 45 Days
- Is E Way Bill Valid If Transport ID Not Mentioned in PART A But Vehicle details mentioned in PART B
- Specified Profession
- Section 54F - Exemption on LTCG in 2026 for HP purchased in 2023
- Sales amount in Gstr1
- CG after sale of flat
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
- Annexure B utility for GST Refund
- Tax amount diff in Gstr1 and 3B in tax compare reports
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
