Corporate Finance

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Book Value vs. Market Value Debt

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Crystal Company issued \$15 million worth of 20 year bonds, paying 5% coupons, and recording \$15 million as long term debt on its balance sheet. If current interest rate is 7%, the market value of these long term bonds would likely be:

A

Equal to $15 million

B

Greater than $15 million

C

Less than $15 million

D

Cannot be determined without knowing the company's rating