December 2014

1: In the case of redeemable debentures issued at discount and to be redeemed at par, approximate cost of debenture (before tax adjustment) will be equal to
A.

rate of interest

B.

amount of interest divided by issue price

C.

amount of interest divided by par value

D.

(amount of interest + ([par value - issue price]/ tenure of debenture))/((par value + issue price) /2)

 

Answer : D

Explanation :

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Option: A

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