10% R150 Debentures, 2.5 million issues. The debentures were issued one year ago and are redeemable in two instalments - half the amount at nominal value in two years' time and the other half at a premium of 5% after a further three years. The current market price for the debentures is R140 without interest. Flotation costs on new issues are negligible and are therefore considered to be irrelevant. Additional information: • The current capital structure based on market values is considered as optimal. • The company tax rate is 28% . calculate market value and cost of debentures

10% R150 Debentures, 2.5 million issues. The debentures were issued one year ago and are redeemable in two instalments - half the amount at nominal value in two years' time and the other half at a premium of 5% after a further three years. The current market price for the debentures is R140 without interest. Flotation costs on new issues are negligible and are therefore considered to be irrelevant. Additional information: • The current capital structure based on market values is considered as optimal. • The company tax rate is 28% . calculate market value and cost of debentures

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter21: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 10P: The D.J. Masson Corporation needs to raise $500,000 for 1 year to supply working capital to a new...

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