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    A company raises ₹1,00,000 by issuing 1000, 10% debentures of ₹100 each at a 2% discount, redeemable after 10 years. If the corporate tax rate is 40%,
    Question



    A company raises ₹1,00,000 by issuing 1000, 10% debentures of ₹100 each at a 2% discount, redeemable after 10 years. If the corporate tax rate is 40%, what is the cost of capital?

    A.

    6.82%

    B.

    5.98%

    C.

    6.18%

    D.

    5.5%

    Correct option is C

    The cost of debt capital (Kd) is calculated using:



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