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Cost of capital

Financial Management

Why in cost of redeemable debt formula,average is taken for redemption value and net proceeds

N.Gokulnath

CA Inter

★ 850

02-Jul-24 14:58

Answers (1)

It represents the average investment over the life of the debenture. Why average? It simplifies the estimation of the average amount financed by the debt over its life. It assumes that funds are used evenly throughout the period until redemption (though not strictly true).

Nagulakonda Satya Nagamani

CA Final

★ 10K+

02-Jul-24 17:54

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