At a board meeting a director remarks "selling preference shares with a return of 9% or debentures with a return of 9% is really one and the same thing" The company has the option of raising the R400 000 through either: A) The sale of 40 000 preference shares at R10 per share or B) 4 000 debentures of R100 each NB: the tax rate is 30% Do you agree with the director's assertion? Discuss with aid of calculations.

At a board meeting a director remarks "selling preference shares with a return of 9% or debentures with a return of 9% is really one and the same thing" The company has the option of raising the R400 000 through either: A) The sale of 40 000 preference shares at R10 per share or B) 4 000 debentures of R100 each NB: the tax rate is 30% Do you agree with the director's assertion? Discuss with aid of calculations.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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