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Calculate the cost of debt after tax

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Question - A company issues Rs.10,00,000 12% debentures of Rs.100 each. The debentures are redeemable after the expiry of fixed period of 7 years. The company is in 35% tax bracket. (i) Calculate the cost of debt after tax if debentures are issued at par, 10% discount and 10% premium. (ii) If brokerage is paid at 2% what will be the cost of debentures, if issue is at par.

Reference no: EM132935013

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