Daron DEC 95 - issue costs — OpenTuition Forums

CCalin7y ago

Hi John, In what regards the issue costs for a loan of 9m.Issue costs are 2% of the gross sum raised.So 2/98x9 000 000 = aprox. 184 000. When calculating the tax relief this 184 000 is being added to initial 9m but then looking at Fubuki DEC 10, the approach is not the same and the tax relief is being calculated considering the loan amount without issue cost. Could you please advise? Many Thanks

John MoffatTutor7y ago#1

It depends on what the issue costs are bing paid out of the amount raised (in which case they need to raise more than the amount needed for the investment), or whether issue costs are being paid out of existing funds (in which case they only need raise the amount needed for the investment). If it is not clear from the question (and it often is not clear), then as always in Paper AFM, state your assumptions and you will still get the marks.

CCalin7y ago#2

Thank you

John MoffatTutor7y ago#3

You are welcome :-)

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