Question

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

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

Hint:

To calculate the total interest on debentures, multiply the face value of the debentures by the interest rate, ignoring any premium or discount.

Answer 1

The Correct Option is C

Total debentures issued: 8,000 debentures, each valued at rupee 100.

Interest rate: 11%. \[ \text{Total Interest} = \text{Total Value of Debentures} \times \text{Interest Rate} \] \[ \text{Total Interest} = rupee (8,000 \times 100) \times \frac{11}{100} = rupee 88,000 \]