The Shareholders of DEF Systems Ltd Have Invested a Total

question 23

Multiple Choice

The shareholders of DEF Systems Ltd have invested a total of $2 million and have an opportunity cost of 12 per cent.The debtholders of DEF have invested $7 million.If the total return required by the company's capital providers is $1,000,000,how much is the interest rate the company's debtholders are receiving?

• A)18.5 per cent
• B)10.8 per cent
• C)9.5 per cent
• D)8.0 per cent

---

Definitions:

Revaluation Method

An accounting strategy used to adjust the book value of a fixed asset to reflect its current market value.

IFRS

International Financial Reporting Standards, a set of global accounting guidelines developed by the International Accounting Standards Board, providing uniform financial statement reporting.

Tangible Long-Lived Assets

Physical assets that are used in the operations of a business, have a useful life of more than one year, and are not intended for resale.

Nonmonetary Exchange

Transactions in which businesses or individuals trade goods or services without the use of money or monetary units.