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Hi,
Ref: Lecture on borrowing costs
My name is Alicia.
I don’t understand one thing, calculating the temporary investment of surplus funds of 90 mlns (from 31. August till 1.11). This was calculated for two months, which I understand as then there was a strike. But why we didn’t add another 2 months when the work resumed from 1.1 until completion 2 months later. We did it for borrowed costs why not for invested? Didn’t we earn any invested income during this time?
Many thanks for your lectures.
Correct, we didn’t. The question said “work resumed on 1 January and the rest of the money was spent ( from memory! ) ” so we didn’t earn any interest after work was suspended on 1 November
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