[Philip]

cheers

[Philip]

Thank you John.

[Philip]

Just to folllow on from that question, I have another one for example 5 (same chapter)

In the solution it states that new payables is 15/365 x $100,000 = $4,110

I thought that you should allow for the proposed discount and it should be calculated as follows: 15/365 x ($100,000 x 98.5%) = $4,048.

I know ultimately the answer is still the same – i.e. accept the discount, but is my understanding incorrect?

[Philip]

Hi John,

Thank you for the clarification. When I was doing WACC questions I was unsure as to whether to apply tax relief to the cost of the preference dividend.

Thanks again.

[Author]

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