[Qwertycxz]

Correction fv of borrow amount*

We borrow money how much is required to invest right?
Say for eg v need to deposit usd 1000
And usd 1000 say it’s 2000gbp
So we should borrow only 2000 ryt? Thts how much v need to deposit ryt?
Thn y do v take fvof 2000 and borrow the fv?

[Qwertycxz]

In detail (found from afm forum opentuition)

Question number one was an APV calculation for 21 points with a possible interest SWAP and comments on managers view. I got a 12% cost of equity, negative NPV and positive APV after incorporation of subsidised loan finance and tax saving on normal loan interest. At the same time I feel i was not consistent enough – i calculated saving on subs loan versus rate on notmal loan, which was given as 6%, but at the same time SWAP resulted in a decrease of rate to 5.7% and I have caluclated tax saving on interest 5.7%, not 6%.. pehaps subs loan saving should have been calculated as well versus the updated rate (but in this case it would make no sense to discount it at 6%). At the same tine in requirement there was not separate question regarding the rates SWAP which is strange.

[Qwertycxz]

Eben I didn’t understand what my friend meant but I have gone through lot of afm discussion groups and this wat I found

Q1
APV
Need to calculate bank loan which have interest rate swap i.e find the best interest rate, look for PV tax saved on interes

Are you also referring to the same one sir?

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