On the basis of the following information, answer the question.
| Particulars | Amount (₹) |
| Share Capital: | |
| Equity share capital (₹10 each) | 12,00,000 |
| 12% Preference share capital | 3,00,000 |
| Reserves & Surplus | 5,00,000 |
| 10% Debentures | 12,00,000 |
| Current Liabilities | 3,00,000 |
| Fixed Assets | 28,00,000 |
| Current Assets | 7,00,000 |
| Net profit after tax as per Statement of Profit & Loss | 4,50,000 |
| Tax | 1,50,000 |
| Market Price of the Share | 34 |
Interest on Debentures will be:
Answer & explanation
Correct answer: option 3
The correct answer is option 3- ₹1,20,000.
10% Debentures = 12,00,000
Interest on debentures = Debentures x rate of interest/100
= 12,00,000 x 10/100
= ₹1,20,000