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
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.