Question

Dove Ltd. issued 8,000, 11% debentures of Rs.100 each at a premium of 5%. The total amount of interest on Debentures for one year will be:

• A. Rs.80,000
• B. Rs.92,400
• C. Rs.88,000
• D. Rs.880

Hint:

To calculate annual interest on debentures, use the nominal value of debentures and multiply by the stated interest rate.

Answer 1

The Correct Option is C

Interest on 11% debentures: \[ Rs.100 \times 8,000 \times \frac{11}{100} = Rs.88,000 \]