CIMA Exam CIMAPRA19-F02-1 Topic 1 Question 77 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam

Question #: 77
Topic #: 1

GH issued a 6% debenture for $1,000,000 on 1 January 20X4. A broker fee of $50,000 was payable in respect of this issue. The effective interest rate associated with this debt instrument is 7.2%.

The carrying value of the debenture at 31 December 20X4 is:

A$958,400

B$1,065,600

C$1,012,000

D$961,400

Show Suggested Answer

Suggested Answer: A, B, C, D

by Diane at Nov 23, 2023, 11:07 PM

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Marnie

6 days ago

That's a good point, I didn't consider the broker fee. You might be right.

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Gabriele

12 days ago

I disagree, I believe the answer is B) $1,065,600 because the broker fee should be added to the principal amount.

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Marnie

17 days ago

I think the answer is A) $958,400 because the effective interest rate is lower than the coupon rate.

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