Examlex
Cheery Company follows IFRS for its financial reporting. On January 1, 2015 Cheery issued €250 million of 10-year convertible notes that pay interest at 5% annually. Investors pay €250 million for the notes even though the company's credit risk at the time implies a 10% interest rate for traditional debt of similar duration. When the cash flows associated with the debt are discounted at 10%, the resulting value is €175 million.
-When Cheery records interest expense on December 31,2015 the entry will include
After-Tax Cash Inflows
The amount of money that flows into a business after all tax obligations have been accounted for, reflecting the net cash earnings.
IRR
A financial metric used to estimate the profitability of potential investments, equal to the discount rate that makes the net present value of all cash flows both in and out of the investment equal to zero.
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