A compnay has issued 10% Debentures of Face Value of Rs. 5,00,000 as Collateral Security against Rs. 6,00,000, 12% Bank Loan. What amount of total interest will be paid by company for the whole year:-

Rs. 72,000

The correct answer is Option 3- Rs. 72,000.

Loan amount from bank = 6,00,000
Interest rate on bank loan = 12%
Interest = 6,00,000 x 12/100
            = 72,000

No interest will be paid by the company on debentures as it is issued as collateral security. 

So, total interest paid by the company is 72,000.