Financial/economists help

[caps lock on/off/on]

B plc has £100,000 5% debentures in issue. Interest is paid annually on
31 December. The ex-interest market value of the stock on 1 January 2008 is 90% and the stock is redeemable at a 10% premium 0n 31 December 2012. The company pays corporation tax at 30%.

Why is the ex-interest market value of the stock quoted at 90% what does this means.

Does paying interest mean that the company saves because they would be taxes on profits??

Redeemable at a 10% premium? so they are paying to pay back the debenture?

Any help much appreciated.

[EDGE]

Originally Posted by caps lock on/off/on

Why is the ex-interest market value of the stock quoted at 90% what does this means.

Does paying interest mean that the company saves because they would be taxes on profits??

Redeemable at a 10% premium? so they are paying to pay back the debenture?

Any help much appreciated.

Ex int is MV without the Interest accruing to the buyer. IE: this goes to the seller.Interest is tax deductible therefore total int savings are not 100% but would be 100-30%tax, ie:70% of the interest. I think