Determine cost of redeemable debt, Financial Management

Assignment Help:

Q. Determine Cost of redeemable Debt?

Cost of redeemable Debt: - Usually a company issues a debt which is redeemable subsequent to a certain period during its life-time. Such a debt is named as Redeemable Debt. Cost of redeemable debt may as well be calculated before tax and after tax:

  • Cost of Redeemable Debt prior to tax :-

                                  I + 1/n (RV -NP)

          Kdb =  n / {1/2 x (RV +NP)}  X 100

Kdb = Cost of debt before tax

I = Annual Interest Charges

NP = Net Proceeds from the issue of Debt

n = Number of years in which debt is to be redeemed

RV = Redeemable Value of Debtredeemed.


Related Discussions:- Determine cost of redeemable debt

Incremental policy model to the policy making process, Question 1: Poli...

Question 1: Policy implementation is the most critical stage of the policy process. Critically analyse some of the main constraints that hinder the implementation of public pol

Compounding technique for calculating time value of money, COMPOUNDING TECH...

COMPOUNDING TECHNIQUE is the method of calculating the future values of cash flows and involves calculating compound interest.  Under this process, interest is compounded when the

Calculate the rate of return, A Life Insurance Company invested $10,000,000...

A Life Insurance Company invested $10,000,000 in pure-discount U.S. bonds in May 1995 while the exchange rate was 80 yen per dollar. The insurance company liquidated the investment

Evaluate the annual premium for policy, A with-profit whole life assurance ...

A with-profit whole life assurance policy was issued to a life then aged 25 with: • basic (initial) sum assured of S = $100,000; • bonuses added to sum assured at the end of ea

Ledgers, Ledgers: Ledgers record all the entries into the Cash Books. T...

Ledgers: Ledgers record all the entries into the Cash Books. They use the concept of 'double entry' bookkeeping where every ledger entry must be accompanied by another ledger e

Calculate actual returns using the dividend discount model, You've just won...

You've just won a huge $100 million lottery.  You've decided to invest your winnings in the following way:  $30 million in real estate,  $30 million in  corporate bonds and $40 mil

Procedure of measurement of future value, Procedure of measurement of Futur...

Procedure of measurement of Future Value If we are getting a return of 10 % in one year then what is the return we are going to get in two years? 20 %, right. What about return

What circumstances would market to book value ratios, Under what circumstan...

Under what circumstances would market to book value ratios be misleading?  Explain. The Market to Book ratio is helpful, however it is only a irregular approximation of how li

Cost sheet, A proforma cost sheet of a company provides the following data:...

A proforma cost sheet of a company provides the following data:   RO Cost (per unit)      Raw materials 52

Define deposit loan rate spread in the eurodollar, How does the deposit-loa...

How does the deposit-loan rate spread in the Eurodollar market compare with the deposit-loan rate spread in the domestic U.S. banking system?  Why? Answer: The deposit-loan sprea

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd