A Ltd. issues ₹50,000 8% debentures at a discount of 5%. The tax rate is 50%. The cost of debt capital is:

CS Executive · Financial and Strategic Management · PYQS · December 2020
A Ltd. issues ₹50,000 8% debentures at a discount of 5%. The tax rate is 50%. The cost of debt capital is:
(A) 5.42%
(B) 5.1%
(C) 4.42%
(D) 4.21%

Answer & Explanation:

Correct Answer: Option (D)

Official answer key: (D).

Topics: Financial Management

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