Examveda

A company has issued 10% perpetual debt of Rs. 1,00,000 at 5% premium. If tax rate is 30%, then the cost of debt will be

A. 10%

B. 15%

C. 6.66%

D. 8.21%

Answer: Option C

This Question Belongs to Commerce >> Business Finance

Join The Discussion

Related Questions on Business Finance

A. Operating ratio

B. Sales turnover ratio

C. Current ratio

D. Acid test ratio

View Answer

A. Net present value method

B. Internal rate of return method

C. Profitablity index method

D. None of the above

View Answer

List-I	List-II
a. Modigliani Miller approach	1. Commercial papers
b. Net operating income approach	2. Working capital management
c. Short-term money market instrument	3. Capital structure
d. Factoring	4. Arbitrage

A. a-4, b-3, c-1, d-2

B. a-3, b-4, c-1, d-2

C. a-4, b-3, c-1, d-2

D. a-3, b-2, c-4, d-1

View Answer

A. All financing by retained earnings only

B. No change in the key variables such as EPS and DPS

C. The firm has finite life

D. All earnings are either distributed as dividends or invested internally immediately

View Answer