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Borrowing costs – net borrowing costs

This topic has 1 reply, 2 voices, and was last updated 4 years ago by P2-D2.

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October 10, 2020 at 2:15 pm #588528
denison
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In the Borrowing costs – net borrowing costs example
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.
October 11, 2020 at 8:43 am #588575
P2-D2
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It is for one month as this was the period where no construction was taking place due to the strike. The 500,000 figure is calculated as shown in the brackets in the example. The 70,000 is from the 20 invested at 4% for one month.
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