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Here how do u calculate the annnula tax relief
42970k*60%*0.015*20%—– how do u get 0.015?
42970k*40%*0.04*20% —— how do u get 0.04?Annual subsidy benefits
42970k*60%*0.025*80%—— can u explain this as well?The question says that 60% of the money is borrowing at 1% less than the govt debt rate which is 2.5%. 2.5% – 1% = 1.5% or 0.015
The rest of borrowed at their normal borrowing rate which is given in note (v) as 3.5% + 1.5% = 4%.
The subsidy benefit is therefore 4% – 1.5% = 2.5% ( x 80% to get it net of tax)
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