Page 6 - FINAL CFA I SLIDES JUNE 2019 DAY 9
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Session Unit 8:
31. Non-Current (Long-Term) Liabilities
(a) Market rate of 9% -this would be a premium bond, p.276!
tanties Premium
Amortisation
$772
$842
$917
Interest expense = Market Rate * Beginning BV of Debt
Recall we said:
Alternatively,
As premium is amortized,
Interest expense = Coupon payment –premium amortisation
(effectively paying less than coupon rate = 9%) BV of bond liability
decreases to FV of the
bond at maturity.
