Question

A Company issues Rs. 10, 00,000, 12% debentures of Rs. 100 each. The debentures are redeemable after the expiry of fixed period of 7 years. The company is in 35% tax bracket. You are required to:
(i) Calculate the cost of debt after tax, if debentures are issued at:
(a) Par (ii) 10% Discount (iii) 10% Premium
(ii) If brokerage is paid at 2%, what will be the cost of debentures, if issued at par?

Answer 1

Answer:

20 % brokage

Explanation:

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