Hello
please solve -- cost of debentures
company having 12% debentures Rs.120 million (Rs.100 each)
current ex-interest debenture market value Rs102.5 per Rs100
the debentures are redeemable after 3 years
Answer:
Let the pre-tax cost of debenture = kd
Then
102.5= 12/(1+kd)+12/(1+kd)^2+112/(1+kd)^3
the answer is 11% as per book
My problem
i am unable to get the answer 11% (by using calculator)
please help me anyone by explining this by step by step ( with each and every simple step)
thanking you
CAclubindia
