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Hello,
I got stuck in the finance cost saving part, where it says ‘with a saving of 5% per year or $34028 per year.’ , in the official acca answer.
Could you please shed some light for that part only?
Thanks.
I assume that you are happy with the fact that the overdraft falls by $680,551 (if not, then do ask again).
Since the interest rate on short-term borrowing is 5%, then having a lower overdraft will be less interest payable. Therefore the interest saving per year = 5% x 680,551 = $34,028.
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