[wanyo]

Thank you sir !

[wanyo]

https://opentuition.com/topic/tippletine-co-mar-jun-2018/

Hi sir, I was confused with the issue cost too.

Eg. $30.6m is needed for the project, issue cost 4% on gross finance, interest cost 2.2%

Just to clarify, if the question states that the ISSUE COST WILL BE ON GROSS FINANCE, the issue cost will be paid out of CASH RESERVES AVAILABLE, what we USUALLY do is the issue cost will be
$30.6m*2%= $0.612m.

And the Tax shield on interest will be ($30.6m*2.2%), as we only borrowed $30.6m.

Thank you sir in advance

——-
Taking AFM MJ 2021 paper Robson Co as example,
” Issue costs of 2% are payable on gross external financing and are not allowable for corporation tax. Issue costs are payable out of available cash reserves. ”

The issue cost in the answer is ( Rights issue10, subsidised loan 40, bank loan 50) =$100m
$100m*2%=$2m.

so, issue cost paid out of cash available= %*amt needed
if not mentioned, assume borrow the issue cost too, ie issue cost= (amt needed gross up to include issue cost)*%

Is the above correct? (and Tippletine is an exception)

[wanyo]

Hi, Im currently doing topic 18 and is planning to do revenue growth analysis and sales per marketing cost spent. But because of covid-19, the revenue actually gone down, how should I carry out the analysis on this?

Thank you.

[wanyo]

Thank you so much for the clarification , sir. Understood 🙂

[wanyo]

thanks a lot sir.

[wanyo]

Thank you Sir,

So for the 4000 is not required to multiply by the bonus fraction as it is issued on the same date as the bonus issue, and not been issue previously, did i interpret it correctly?

thank you so much

[wanyo]

Hi sir, I have a question here, for the fresh issue of 4000 on 1 Jan, why doesn’t it required to multiply by the bonus fraction?

My workings:
1 OCt x6 15000 x 3/12 x 4/3 = 5000
1 Jan x7 4000
——–
19000 x 9/12 x 4/3 =19000
(bonus1/3) 6333 x 9/12 = 4749.75
————
28749.75

Thank you.

[Author]

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