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Cost of capital

Financial Management

Sir ,in Illustration 3 ,the debentures are issued "at par "is what given in the question, then NET PROCEEDS = MARKET PRICE?

Dhivyaa Latha

CA Inter

★ 4K+

10-Jan-22 18:29

231

Answers (2)

Best Answer

When debentures are issued at par, issue price = face value and when debentures are redeemable at par net proceeds = issue price. In illustration 3 we need to calculate Kd on 1.4.2017,not on maturity date. and the given market price on that date is 80, which would be considered as net proceeds on that date.