A company needs Rs 5,00,000 to finance a new project over a period of three years. The floatation cost per issue lot of debentures is Rs 1,000 and the interest on debt is 15% p.a. The return from the...

A company needs Rs 5,00,000 to finance a new project over a period of three years. The floatation cost per issue lot of debentures is Rs 1,000 and the interest on debt is 15% p.a. The return from the new project is 12%. Find the optimal size of the issue of debentures.