Calculate the cost of debt if the company issues Rs.10000, 8% debentures at a premium of 10%.Options :8%7.27%9%7.8%
Question
Solution 1
The cost of debt can be calculated using the formula:
Cost of Debt = (Interest Expense / Net Proceeds) * 100%
Here, the interest expense is 8% of Rs. 10,000, which is Rs. 800.
The net proceeds are the amount the company receives from issuing the debentures. Since the debentures are issued at a pr Knowee AI is a powerful AI-powered study tool designed to help you to solve study problem.
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Knowee AI is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI is a powerful AI-powered study tool designed to help you to solve study problem.
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