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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Illustration on net borrowings chapter 2
Sir, In the second para it says that 100 million loan was taken “of which” 20 million was invested so should it not be “80 million” loan for construction and “20 million” for investment which makes a total of “100 million” (80+20)
I think it means that 20 million was invested in the project, i.e. taken from the amount borrowed and used to construct the asset.
Thanks
So you mean that 20 million was a part of the 300 million loan facility and not of the 100 million?
The facility means that be can potentially borrow up to $300 million if we wished to do so but in this instance we have borrowed $100 million from it. With the $100 million cash at our disposal we have invested $20 million on the project and put aside $80 million in a bank account.
Hope that helps clear it up.
Thanks