A . Abacus Limited issued 15 year, 14 per cent bonds five years ago. The bond which
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Question:
A . Abacus Limited issued 15 year, 14 per cent bonds five years ago. The bond which has a face value of `100 is currently selling for Rs.108.
(a) What is the pre-tax cost of debt?
(b) What is the after-tax cost of debt? (Assume a 35 per cent tax rate.)
B. Omega Enterprises issued 10 year, 9 per cent preference shares four years ago. The preference
share which has a face value of Rs.100 is currently selling for Rs.92. What is the cost of
preference shares?
Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
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