Calculate the present value of thefuture returns

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(a) A company issues debentures worth Rs. 100 crore and pays on interest of Rs. 10 crore at the end of 1year. What is the actual cost of debt if the prevailing tax rate is 40%?

(b) An initial investment of Rs. 2, 500 give the revenues for the next 5 years in the following manner: Year 1:Rs. 900; Ye ar 2: Rs. 800; Year 3: Rs. 700; Year 4: Rs. 600 and Year 5: Rs. 500. Calculate the present value of thefuture returns if the discounting rate is 10%.

Reference no: EM13497331

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