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Replacement Asset Value – Market Value of Debt
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4:53 pm
October 21, 2009


Richard

Paris, FRANCE

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Hello Jonathan,

When calculating the Replacement Value of Asset of a company, the question exists to calculate the present value of both short end long terme debt.

Do you know how to do that ? and if possible with an example ?

From examples taken from case study, it seems that the market value depends of the interest debt, book value of debt and capitalization. but it is not clear to me.


Merci d'avance

Richard

5:55 pm
October 21, 2009


Jonathan Goldberg

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Market value of long term debt can be tricky as you first need to estimate the company's cost of debt – using comparables, actual traded debt, etc. Once you have this you would take the interest payment in dollars and divide it by the cost of debt estimated. This will give you the market value of the debt.
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