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- This topic has 3 replies, 2 voices, and was last updated 4 years ago by John Moffat.
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- November 10, 2020 at 7:55 pm #594654
For the Currency Swap part in:
(b)(i). Calculate annual percentage interest saving which Co. could make from using a currency swap. compared with borrowing directly in Wirtonia, Demonstrate how the currency swap will work.If my answer is like this…
i.Own borrowing(without swap):
B: WBR + 0.6%
C: 5.8%
total: WBR + 6.4%ii.swap
B: 4%
C:WBR + 0.4%
total : WBR + 4.4%saving = 2% [B: 60%*2% = 1.2%, C: 40%*2% = 0.8%)
bank fee = 0.5% [ B=0.3%, C= 0.2%]iii.end result
B: WBR+0.6% -1.2% +0.3% = WBR-0.3%
C: 5.8% – 0.8% +0.2% = 5.2%1.If i were to show only that, will this already satisfied the requirement of ” Demonstrate how the currency swap will work.” ? (bcs i saw another separate computation in the answer scheme)
2. What does the annual percentage interest saving referred to? Is it required the ‘saving minus bank fee’ to be shown separately? or the answer i shown above has justify it?
I humbly beg for your guidance..(and yes i already watched your lecture video. Just need confirmation for this part)
November 11, 2020 at 10:08 am #594692Yes – what you have done would be sufficient for the marks 🙂
November 11, 2020 at 1:27 pm #594731alright. thank you sir 🙂
November 11, 2020 at 2:58 pm #594741You are welcome 🙂
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