What factors should be considered in determining the issue price of a debenture

The rate of interest

The duration of the debenture

The periodic interest payment

Step-by-step explanation:

The issue price of a bond is computed using the excel formula present value,which is given below:

=-pv(rate,nper,pmt,face value)

The rate refers to yield to maturity of the debt instrument.This has impact on how much the debenture is sold,hence the rate of interest to be given to investors would go a long way in determining how much the bond or debenture is sold for.A high credit rating company would pay a minimum yield to maturity while a low credit rating company needs to offer a higher yield so as to encourage investors to take the higher risk of investing in the company.

The length of time is also which is denoted by the nper,the longer the loan would be repaid the higher of uncertainty of the company defaulting in repaying.

The coupon interest payable periodically,annually or semiannually is a also an important factor in determining the price of the debenture

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