Finance Archive Chegg Preferred Dividends Formula Media Consider This Case Robert Gillman Equity Research Analyst Advisors Believes Outstanding Shares Dividend Per Share Diluted

Finance Formulas / July 18, 2018 / Tatiana Douglas

Sales Formula

Unit Product Cost Formula

Rate Of Return On Investment Formula

Roi Calculation Formula
Average Sale Period Formula

You can use the bond price formula to determine the value of a bond. While it involves some number crunching, it’s a fairly straightforward process because future cash flows to the investor (the bondholder) are always specified ahead of time. The issuer has to meet the interest and principal payments as they come due, or the bonds will go into default – something that can have devastating consequences for the issuer and, in the case of corporate bonds, its shareholders.

Consider the following example to illustrate the concept. Assume hypothetical company BigBox has operating income or earnings before interest and taxes (EBIT) of \$100 million in Year 1, with interest expense of \$10 million, and has 100 million shares outstanding. (For the sake of clarity, let’s ignore the effect of taxes for the moment.)

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