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John Moffat.
John Moffat.-
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aishaasad
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hello Sir’
i dont understand that how is nominal value of bonds redeemed is callculated as $80 million i thought nominal value to be $100.
moreover in part c why is 49 million ,the old profit after tax is used to calculate the revise interest coverage ratio and not the revised PAT.
thankyou
John Moffat
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The nominal value is $100 per unit (per bond). Each unit has a market value of $112.50.
The company is using the 90 million to buy back bonds at the market value of 112.50 each. So the number they will buy us 90M / 112.50, and the total nominal value will be (90M / 112.50) x 100.
For part c, interest cover is always calculated using profit before tax – it would be meaningless to use profit after tax.
Also, there is no revised profit before tax – the company is using the money to buy back bonds, and so all that changes is the interest to be paid.
aishaasad
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