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Question
Explain the following term/concept.
Interest on Debentures
Solution
Debenture capital is a loan or borrowed capital of the company. Debenture holders are the creditors of the company. They get a fixed rate of interest as a return on their investment in debentures. Interest is a debt. It is not dependent on profits. The company pays interest on debentures either through interest warrant or via electronic mode i.e. NEFT, ECS, etc.
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