Question
PQ company issues a Rs. 100 debentures at par. The interest rate is 14%. Debentures will be redeemed at par after 7 years. Tax rate
PQ company issues a Rs. 100 debentures at par. The interest rate is 14%. Debentures will be redeemed at par after 7 years. Tax rate is 35%.
a) What is the cost of debenture?
b) Recalculate the cost of debenture if redemption is at a premium of 10%.
c) Recalculate the cost of debenture if redemption is at a discount of 10%.
Note: Use excel shortcut and share formulae
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Fundamentals Of Investments Valuation And Management
Authors: Bradford D Jordan, Thomas W. Miller Jr., Steven D. Dolvin
6th Edition
0073530719, 9780073530710
