A company issued 10000, 10% debentures of 100 each on 1st April, 2003 to be matured on 1st April, 2008. If the market price of thedebentures is 80. Compute the cost of debt assuming 35% tax11.667%12.48%11%13%

Market price = 80 Tax rate = 35% Face Value = 100 Coupon = Coupon Rate * Face Value = 10%*100 = 10 N…

Answered: A company issued 10000, 10% debentures…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A company issued 10000, 10% debentures of 100 each on 1st April, 2003 to be matured on 1st April, 2008. If the market price of the debentures is 80. Compute the cost of debt assuming 35% tax O 11.667% O 12.48% 11%