Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › fubuki december 2015
- This topic has 5 replies, 2 voices, and was last updated 8 years ago by John Moffat.
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- October 7, 2015 at 4:20 pm #275435
hi sir,
in the above question second paragraph it said the government will subsidize 80% of the 14,480,000 at 200 basis points below fubuki kd and fubuki can borrow at risk free rate (4.5%) +300 basis points.from my understanding in the tax shield computation,
14,480,000*80% *4.6%(subsidised interest cost)* 25% (tax rate)
14,480,000*20% *4.8% (real interest cost) * 25%.
the problem is the model answer did it quite differently and i think our diffrences is in the basis issues. im taking 300 basis points as 0.3 and 200 basis points as 0.2 but im not sure how the model amswer deals with it.
October 7, 2015 at 6:11 pm #275454I hardly think that you really mean December 2015 ( if you do, then you are better at guessing that I am ).
Please tell me which exam it really is from, so that then I can find it and try and give you a proper
answer 🙂October 8, 2015 at 1:36 am #275479december 2010
October 8, 2015 at 9:13 am #2754991 basis point is 0.01%, so 300 basis points is 3% and 200 basis points is 2%
So the real interest rate is 7.5% and the subsidised rate is 2% less than 7.5% (i.e. 5.5%)
October 8, 2015 at 11:04 am #275516why was the issue cost dealt with that way.
it was 4/96 * 14488.
i was thinking its just simple 4%*14488.
October 8, 2015 at 4:43 pm #275569Because the question says that the issue costs are 4% of the gross finance required.
For every $100 of finance raised, $4 will be issue costs, leaving only $96 of the gross finance available for investment.
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