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welcome back now again we are going to solve the cost of capital problem and that this deals with the cost of redeemable debenture or redeemable debt all right so how do you find out the cost of redeemable debentures or debt so cost of redeemable that means you will get back okay your money after a certain period of time when you invest in redeemable debentures after some period of time when the debenture matures youll get back your money so cost of redeemable debentures or debt okay kd is equal to interest into 1 minus your tax rate all right plus rp ill tell you what rp is minus ip okay divided by the life of the debenture okay now rp is redemption price and ip is net issue price same thing here rp plus ip divided by 2 all right so that is the formula for finding out the cost of redeemable debenture or debt okay now lets look at this problem a limited issued rupees 1 lakh 12 debentures of rupees 100 each at a discount of 5 redeemable at the end of 5 years at a premium of 5 issue e