Bond valuation is determined on the basis of the economic condition and risk factor of the company

Bond valuation has one fundamental principle. This principle is that the bond has a value that is equal to the present value of the expected cash flow that will occur in the future.

The Time Value of Money is a foundational principle in finance that states that money received today is worth more than the same amount received in the future due to its potential earning capacity. In the context of bond valuation, the Time Value of Money is used to calculate the present value of future cash flows generated by the bond, including interest payments and principal repayment. By discounting these future cash flows back to their present value using an appropriate discount rate (which accounts for the time value of money), the current price of the bond can be determined.

procedure of valuation of good will

procedure of valuation of good will

procedure of valuation of good will

procedure of valuation of good will

procedure of valuation of good will

procedure of valuation of good will

procedure of valuation of good will

procedure of valuation of good will

procedure of valuation of good will

The price of the bond decreases; the inflation premium would increase the market interest rate, which in bond valuation is located in the denominator, and the coupon payment rate is located in the numerator. When calculating the NPV of future coupon payments, as the denominator or market interest rate + inflation premium increases, the Net Present Value of future coupon payments decreases and the overall value of the bond decreases as well. The price of the bond decreases; the inflation premium would increase the market interest rate, which in bond valuation is located in the denominator, and the coupon payment rate is located in the numerator. When calculating the NPV of future coupon payments, as the denominator or market interest rate + inflation premium increases, the Net Present Value of future coupon payments decreases and the overall value of the bond decreases as well.