On 1 july 2014 abc limited issued 10 million in five year, Ask an Expert

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On 1 July 2014, ABC Limited issued $10 million in five year debentures that pay interest each six months at an annual coupon rate of 10%. The debentures will mature on 30 June 2019, which is also the date of the final interest payment. At the time of the issue of the debentures, the market rate of return is 12%.

Required:

Determine the issue price of the debentures and find out any premium or discount.

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