Académique Documents
Professionnel Documents
Culture Documents
I = Interest
RV = Redeemable value of debenture
NP = Net proceeds
Example :
A company issue RS. 5,00,000 , 10% redeemable debenture
redeemable after 5 years. The cost of floating amount to 4% of face
value.
Solution : I = 10% of 5,00,000 =RS. 50,000
No. of years = 5 yrs.
RV = RS. 5,00,000
NP = RS. 5,00,000-4%of RS. 5,00,000(cost of floating)=
RS.4,80,000
Dividend+ ( RV - NP )
No. of years ×100
(RV + NP)
2
Example: