Question

A firm issues debentures of ₹10,00,000 at 10% coupon rate, redeemable after 5 years at 5% premium. Flotation cost = 2%. Calculate effective cost of debt (Kd) before tax.

A 11.20%
B 10.95%
C 12.10%
D 9.80%
E 10.00%
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