Based on following case, answer question :

A Ltd issued 2000, 10% debenture of ₹100 each on April 1, 2019 at a discount of 10% redeemable at a premium of 10% after five years. Company purchased assets of the book value of ₹ 2,20,000 from B Ltd. at book value and agreed to make payment of purchase consideration by issuing another 2000, 10% Debentures of ₹100 each at a premium of 10% on above mentioned date only.

Debentures can be redeemed in which of the following ways?

All of these

The correct answer is Option (4) - All of these.

Redemption of debentures refers to extinguishing or discharging the liability on account of debentures in accordance with the terms of issue. In other words, redemption of debentures means repayment of the amount of debentures by the company. The four ways of redemption of debentures are:

1) Payment in lump sum: This involves repaying the entire principal amount of the debentures in a single payment.

2) Payment in installments: Debentures are redeemed by making periodic payments, often in multiple installments, according to a predetermined schedule.

3) Purchase in the open market: The company can buy back its own debentures from the open market if they are available for purchase. When a company purchases its own debentures in the open market for the purpose of immediate cancellation, the purchase and cancellation of such debentures are termed as redemption by purchase in the open market.

4) By conversion into shares or new debentures: Debenture holders may have the option to convert their debentures into either equity shares or new debentures issued by the company.