Because the funds used to invest was taken from the funds borrowed to finance the construction.
Hence it is directly related, so we will take 3 months for investment,
Just like we did for construction.
D
darlington·
Good day, i also had the same question and i stand to be corrected but i would want to think that the assumption is that the investments were not external thereby they weren't immune from the halt of the company operations due to the strike.
A
Avneesh Chuttoor·
HI sir
why did u use 3 months to calculate the investment and not 4 months?
N
neha·
Hi Chris, why did we took $100m for finance cost instead of $80m, as we are already calculating $20M for investment.
Thank you,
D
Denison·
Can anyone explain to derive at the finance cost of 500,000 and the investment income of 70,000, Why 1/12 months were used? As per the Q it states the borrowing started from March'18.
Appreciate your help.
M
manoj·
What will be the interest charged by bank for one month as per you ? You will get your answer.
A
aputu·
Sir please how did u arrive at the finance cost of 500000 and the investment income of 70000.
N
noumanbt·
Hi...sir why didn't we include the month of june when capitalizing?
B
bader·
He did.. March 1 to June 31 is 4 months...
T
Truc·
He did capitalize the borrowing cost incurred in June. He didn't capitalize the month of May because the construction stopped due to strike action.
M
malachipire·
What happens if you use the un rounded figure?
R
rajemrgn6·
Dear, could you please explain how did you arrive at $70000 for investment income.
per the below calculation it must be,
20M @ 4% x 1/12 = $66,667.
Many thanks in advance.
D
dammylion·
Round it off, you will get 70,000
L
lolu94·
How will rounding up 66,667 give you 70,000?
F
Faeq Quadri·
Rounding it off to the closest 1000$ will give us 70,000$ and that's what Mike has done in the video.
K
Kamran·
So he has copied the numbers from the illustration example in the notes. the notes put the numbers in millions. so investment is 20m * 4% which is 0.8m for the year, and so one month is 0.067m or 0.07m. you are correct that if put into full numbers, the figure would be $66,667, but rounding to 1 dp gets you 0.07m = 70 (000) as he wrote
Hence it is directly related, so we will take 3 months for investment,
Just like we did for construction.
why did u use 3 months to calculate the investment and not 4 months?
Thank you,
Appreciate your help.
per the below calculation it must be,
20M @ 4% x 1/12 = $66,667.
Many thanks in advance.