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hi
can you pls tell me why arent we subtracting the bank fee in NPV calculation in the dec 04 currency swap question part b2?You have a good point.
However because it is assumed that the swap takes place (and therefore the bank fee is payable whatever) they have ignored the fee.- Topics: 0
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The bank fee forms part of the finance cost for Galeplus therefore is accounted for in the relevant risk adjusted discount rate of 15%
Same principle as when arriving to the base case NPV and you assess the financing side effects separately.
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