Question

Star Ltd. purchased business of Hira Ltd. for ₹ 8,40,000 to be paid by issue of 9% Debentures of ₹ 100 each at a premium of 20%. Number of Debentures that will be issued are ______.

Options

• 8,400 Debentures.

• 7,000 Debentures.

• 6,720 Debentures.

• 7,620 Debentures.

Answer 1

Star Ltd. purchased business of Hira Ltd. for ₹ 8,40,000 to be paid by issue of 9% Debentures of ₹ 100 each at a premium of 20%. Number of Debentures that will be issued are 7,000 Debentures.

Explanation:

Issue price of each debenture at 20% premium:

₹ 100 + 20% = ₹ 120

Number of debentures issued:

`(8,40,000)/120 = 7,000`

Hence, 7,000 debentures will be issued.