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December 21 Hawker CO question

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › December 21 Hawker CO question

  • This topic has 1 reply, 2 voices, and was last updated 2 years ago by IAW3005.
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  • November 17, 2023 at 10:45 am #695005
    iamnawafsheikh@gmail.com
    Participant
    • Topics: 2
    • Replies: 0
    • ☆

    In the answer section, the CF is discounted at 4%. Can you assist me in understanding why 4% is used here and not 8%?

    Best Regards

    November 17, 2023 at 2:13 pm #695013
    IAW3005
    Moderator
    • Topics: 4
    • Replies: 1604
    • ☆☆☆☆☆

    When we are deciding between lease v buy questions – we are simply deciding which is the cheaper of the two.

    Since borrowing is costing 4% we discount at 4% just to see whether leasing is more or less expensive.

    Do watch our free lectures on this where we do explain.

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