Exhibits 10-10A and B contain excerpts from the University of Toronto€™s annual report for its 2012/13 fiscal year.

EXHIBIT 10-10B EXCERPT FROM UNIVERSITY OF TORONTO€™S 2012/13 ANNUAL REPORT
On December 7, 2011, the University issued Series E senior unsecured debenture in the aggregate principal amount of $100.0 million at a unit price of $1,000 for proceeds of $100.0 million. On February 7, 2012, the University issued additional Series E senior unsecured debenture in the aggregate principal amount of $100.0 million at a unit price of $1,026 for proceeds of $102.6 million. The debenture bears interest at 4.251%, which is payable semi-annually on June 7 and December 7, with the principal amount to be repaid on December 7, 2051. To date, the University has spent $91.7 million of the proceeds on capital assets.
Required:
a. Refer to Note 11 in Exhibit 10-10B. Explain what it means when it states that the Series E debentures are €œsenior unsecured debentures€?
b. How much cash did the university raise through the two issuances of series E debentures? How does this compare with the face value of these debentures?
c. At what amount are these debentures carried on the University of Toronto€™s balance sheet (statement of financial position) in Exhibit 10-10A? Explain the amount these debentures will be carried at just prior to their maturing in 2051.
d. Note 11 states that the debentures bear interest at 4.251%, but given the amount that the university received at the time of issuance, will their interest costs be more, less, or equal to this rate?

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XCHIBIT 10-10A UNIVERSITY OF TORONTO'S 2012/13 CONSOLIDATED BALANCE SHEETS UNIVERSITY OF TORONTO CONSOLIDATED BALANCE SHEETS millions of dollars) April 30, 2013 April 30, 2012 May 1 2011 (note 2B) ASSETS Current Cash and cash equivalents Short-tenm investments (note 3) Accounts recelvable (notes 3 and 22) Inventories and prepaid expenses 104.1 645.1 82.7 18.6 850.5 46.4 2,403.6 4,018.8 7,319.3 121.0 663.9 535.1 104 8 16.9 756.1 Long-term accounts receivable Investments (note 3) Capital assets, net (note 4) 893.1 45.2 2,095.6 3,921.9 6,955.8 2,085.7 3,837.1 6,715.7 LIABILITIES Current Accounts payable and accrued liabilities (notes 3, 6 and 12) Deferred contributions (note 13) 298.4 372.7 671.1 248.0 370 3 278.1 371.2 649.3 618 3 Accrued pension liability (note 5) Emplayee future benefit obligation other than pension (note 5) Series A senior unsecured debenture (note 7) Series B senior unsecured debenture (note 8) Series C senior unsecured debenture (note 9) Series D senior unsecured debenture (note 10) Series E senior unsecured debenture (note 11) Other long-term debt (note 12) Deferred capital contributions (note 14) 1,122.9 734.7 158.9 199.1 74.7 1,250.2 616.8 158.9 199.1 74.7 74.4 1,040.3 5069 158.9 199.1 201.6 17.3 1,076.4 4,331.1 19.7 986.3 3,678 6 1,018.3 4,262.3 NET ASSETS (Statement 3) Unrestricted deficit intemally restricted (note 15) Endowments (notes 16, 17 and 18) (129.7) 1,454.2 1,663.7 2,988.2 7,319.3 (134.9) 1,518.1 2,693.5 6,955.8 1,670.6 1,540,1 3,037,1 6,715,7 Contingencies and commitments (notes 3, 24 and 25) (See accompanying notes)