CA Inter Cost of Debt — practice questions
7 free MCQs with worked solutions. Tap any question for the answer + explanation, or practice them all in the app.
Practice CA Inter Cost of Debt in the app →Cost of irredeemable debentures is given by:A company issued 12% irredeemable debentures with current market price ₹94 and tax rate 35%. The current cost A company issued 10,000, 10% debentures of ₹100 each at 10% premium, redeemable at par after 5 years. Tax rateIn the Cost of Debt formula, the tax-shield (1 − t) is applied because:A bond pays ₹10 annual coupon (10% of face ₹100), Net Proceeds ₹90, redeemable at par in 5 years. Tax 30%. AppIn the YTM (Present Value) approach to cost of redeemable debt:If a company issues 10% debentures of ₹100 at par, tax rate 25%, the after-tax cost of debt is: