Wor Ltd issued 100 $100 000 par amount debentures on 1 January 20X3.The annual interest rate is 10% and the premium on issue was $5000 per debenture.The interest is paid in arrears on 31 December of each year.The debentures mature on 31 December 20X7.Wor Ltd has a financial year end of 30 June.
-How much interest will Wor Ltd pay per debenture, over the debenture's term?

Question

Quizplus · Accepted Answer

The annual interest per debenture is 10% of $100,000, which equals $10,000. Since the debentures mature in 5 years, the total interest paid per debenture over the term is 5 years * $10,000/year = $50,000.

Wor Ltd Issued 100 $100 000 Par Amount Debentures on 1