I need an example to understand the bold lines:Most liabilities are valued at the present value of cash flows discounted at the rate that was current when the liability was incurred, not at the present value of cash flows discounted at the current market interest rate. (I know this, this is not an issue)If market interest rates increase, a liability with a fixed interest rate that is below the market rate increases in its value to the company.If market rates decrease, a liability with a fixed interest rate that is higher than the market interest rate sustains a loss in value. Please explain me how? According my understanding:If current market interest rate is 8% and the company has issued its debt at 6% historically; firm is paying less to its debt holders and this is benefit to the company.If current market interest rate is 8% and the company has issued its debt at 9% historically, company is paying more than the interest rate in the market and thus is a loss to the company.Please let me know is my understanding right or wrong?
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