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Corporate Finance #9 Valuation-Bond, Common /Preferred Stock
Rating: 4.4 out of 5(71 ratings)
32,309 students

Corporate Finance #9 Valuation-Bond, Common /Preferred Stock

Learn to value bonds, common stock, and preferred stock from a Certified Public Accountant (CPA)
Created byRobert (Bob) Steele
Last updated 2/2022
English
English [Auto],

What you'll learn

  • Explain valuation methods for financial assets
  • Calculate the valuation of bonds
  • Calculate the valuation of preferred stock
  • Calculate the valuation of common stock

Course content

3 sections • 42 lectures • 11h 6m total length

  • 1003 Financial Asset Valuation9:05

    Explore present value concepts and market conditions to value bonds, common stock, and preferred stock within corporate finance asset valuation.

  • 1005 Bond Issued at Par5:36

    Explain issuing bonds at par, recording cash and bonds payable, and how market rate differences create premium or discount when selling bonds, with no effect on net income.

  • 1010 Bonds Market Rate vs Contract Rate7:32

    Explore how bond contract rates compare to market rates, and how premium or discount pricing adjusts the bond's price from face value while interest is paid over time.

  • 1015 Issue bond at a discount%2C calculate%2C and record interest payment26:14

    Learn how to issue a bond at a discount, calculate and record semiannual interest payments, and amortize the discount using a straight-line method, with journal entries and trial balance effects.

  • 1020 Bond Issued at Premium 7min7:19

    Explore how issuing a bond at a premium affects journal entries, carrying value, and interest expense as the premium amortizes to align with market vs contract rates.

  • 1025 Bonds Present Value Formulas13:32

    Learn present value formulas for bonds, including the face amount and semiannual interest annuity, using market rate versus stated rate to value cash flows today.

  • 1030 Bond Price Present Value Tables9:22

    Compute bond price by discounting the face value and the semiannual interest annuity using present value tables.

  • 1035 Bond Price Excel Formula12:32

    Learn to price bonds in Excel using present value formulas, separating the bond’s final face value from interest payments, with semiannual periods over two years.

  • 1040 Preferred Stock Valuation7:52

    Value perpetual preferred stock by its fixed dividends, paid before common stock and without a maturity date, using the present value of a perpetuity (dividend divided by discount rate).

  • 1045 Common Stock Valuation16:33

    Explore how common stock valuation uses present value of future dividends to estimate stock value. Analyze no growth, constant growth, and variable growth dividend scenarios with the discount rate.

Requirements

  • A general understanding of corporate finance concepts

Description

This course will cover the valuation of financial assets including bonds, common stock, and preferred stock.

We will include many example problems, both in the format of presentations and Excel worksheet problems. The Excel worksheet presentations will include a downloadable Excel workbook with at least two tabs, one with the answer, the second with a preformatted worksheet that can be completed in a step-by-step process along with the instructional videos.

The general concept used to value financial assets is to take the present value of future cash flows from the financial asset. Therefore, we will need to use present value concepts and calculations.

The cash flow related to bonds will generally consist of a series of interest payments and a principal payment at maturity of the bond. We can use annuity calculations to determine the present value of the interest payments and present value of one calculation to determine the present value of principal at maturity.

Preferred stock has characteristics similar to bonds in that the payments are often standardized. However, we do not have a maturity date as we do with bonds.

Common stock can be more complex as we consider the future cash flow of dividends in an attempt to value the securities. The common stock dividends are more likely to change over time and we do not have a maturity date as we do with bonds.

Who this course is for:

  • Business students
  • Business professionals

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